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Full text of "United States arms transfer and security assistance programs"

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95th Congress ) 
2d Session / 



COMMITTEE PRINT 



UNITED STATES ARMS TRANSFER AND 
SECURITY ASSISTANCE PROGRAMS 



PREPARED FOR THE 

SUBCOMMITTEE ON 
EUROPE AND THE MIDDLE EAST 

OF THE 

COMMITTEE OX 

INTERXATIOXAL RELATIONS 

U.S. HOUSE OF REPRESENTATIVES 

BY THE 

FOREIGN AFFAIRS AND 
NATIONAL DEFENSE DIVISION, 
CONGRESSIONAL RESEARCH SERVICE, 
^,,^,^,,^ LIBRARY OF CONGRESS 



?•* . 1918 ':SS| 

^ j9/>^' «^.l*' MARCH 21, 1978 



Printed for the use of the Committee on International Relations 




23-874 o 



U.S. GOVERNMENT PRINTING OFFICE 
WASHINGTON : 1978 



COMMITTEE ON INTERNATIONAL RELATIONS 
CLEMENT J. ZABLOCKI, Wisconsin, Chairman 



L. H. FOUNTAIN, North Carolina 
DANTE B. FASCELL, Florida 
CHARLES C. DIGGS, Jr., Michigan 
ROBERT N. C. NIX, Pennsylvania 
DONALD M. ERASER, Minnesota 
BENJAMIN S. ROSENTHAL, New York 
LEE H. HAMILTON, Indiana 
LESTER L. WOLFF, New York 
JONATHAN B. BINGHAM, New York 
GUS YATRON, Pennsylvania 
MICHAEL HARRINGTON, Massachusetts 
LEO J. RYAN, California 
CARDISS COLLINS, Illinois 
STEPHEN J. SOLARZ, New York 
HELEN S. MEYNER, New Jersey 
DON BONKER, Washington 
GERRY E. STUDDS, Massachusetts 
ANDY IRELAND, Florida 
DONALD J. PEASE, Ohio 
ANTHONY C. BEILENSON, California 
WYCHE FOWLER, Jr., Georgia 
E (KIKA) DE LA GARZA, Texas 
GEORGE E. DANIELSON, CaUfornia 
JOHN J. CAVANAUGH, Nebraska 



WILLIAM S. BROOMFIELD, Michigan 
EDWARD J. DERWINSKI, Illinois 
PAUL FINDLEY, IlUnois 
JOHN H. BUCHANAN, Jr., Alabama 
J. HERBERT BURKE, Florida 
CHARLES W. WHALEN, Jr., Ohio 
LARRY WINN, Jr., Kansas 
BENJAMIN A. OILMAN, New York 
TENNYSON GUYER, Ohio 
ROBERT J. LAGOMARSINO, California 
WILLIAM F. GOODLING, Pennsylvania 
SHIRLEY N. PETTIS, California 



John J. Brady, Jr., Chief of Staff 



Subcommittee on Europe and the MiuaLE^EAsf **\, 



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f.\ 



'X 



LEE H. HAMILTON, Indiana, Chairman ' 
BENJAMIN S. ROSENTHAL, New York PAUL FI^I^J^V Illinois -. ^^ 'a ^ 

SHIRL^Itf.-PETTIS, California • 'iv * 



STEPHEN J. SOLARZ, New York 
DONALD J. PEASE, Ohio 
GEORGE E. DANIELSON, California 

Michael H. Van Dusen, Subcommittte Staff Dirrdor 

AusoN L. Brenner, Minority Staff Corlfultant 

Ronald L. Soriano, Subcommittee. Staff A»8ociate 

David P. Barton, Subcommittee Stfff AtMoeyile 

Sandra Decker, Staff AtsisU 

(II) 






«<»>i .c/ 









FOREWORD 



House of Representatives, 
Committee on International Relations, 

Washington, D.C., March 21, 1978. 
This study was prepared by the Library of Congress at the request 
of the Subcommittee on Europe and the Middle East, chaired by 
Hon. Lee H. Hamilton, and has been submitted to the Committee on 
International Relations. 

This report, which examines the various security assistance pro- 
grams carried out by the United States, serves as a useful reference 
document and will be of special interest to members of the Committee 
on International Relations. 

The findings of the study are those of the Foreign Affairs and 
National Defense Division, Congressional Research Service, Library of 
Congress, and do not necessarily reflect the views of the membership 
of the Committee on International Relations. 

Clement J. Zablocki, 

Chairman. 
(in) 



Digitized by the Internet Archive 
in 2013 



http://archive.org/details/unitedstatesarmsOOIibr 



LETTER OF TRANSMITTAL 



House of Representatives, 
Committee on International Relations, 

Washington, D.C., March 21, 1978. 
Hon. Clement J. Zablocki, 

Chairman, Committee on International Relations, U.S. House of 
Representatives, Washington, D.C. 
Dear Mr. Chairman: I enclose a study prepared for the Subcom- 
mittee on Europe and the Middle East by the Congressional Research 
Service of the Library of Congress. This report's basic objective is to 
examine the various U.S. security assistance programs. 

The purpose of commissioning this study from the Congressional 
Research Service was largely in response to my concern, as well as 
that of many Members of Congress, with the large security assistance 
programs, including arms sales, that the United States undertakes 
worldwide, particularly in the Middle East. Congressional scrutiny of 
direct and indirect military assistance programs, as well as of arms 
sales, is an increasingly important element of Congress overall over- 
sight responsibilities. 

This study contains a review of the various legislative mechanisms 
by which Congress oversees the many U.S. security assistance pro- 
grams. This study will be useful to Members of Congress and others 
interested in the nature and scope of these programs. It synthesizes in 
one volume the numerous programs and the legislative controls 
affecting them. 

This report was prepared by Herbert Y. Schandler, Specialist in 
National Defense, Foreign Affairs and National Defense Division, 
Congressional Research Service, Libraiy of Congress. The analysis 
presented here is that of the Congressional Research Service and does 
not necessarily represent the views of members of the Subcommittee 
on Europe and the Middle East. 

I believe this study will be of special interest to my colleagues of the 
Committee on International Relations, which has primary jurisdiction 
over these programs. 

Respectfully submitted, 

Lee H. Hamilton, 

Chairman, 
Subcommittee on Europe and the Middle Ea^t. 

(V) 



LETTER OF SUBMITTAL 



The Library of Congress, 
Congressional Research Service, 

Washington, D.C., February 15, 1978. 
Hon. Lee H. Hamilton, 

Chairman, Subcommittee on Europe and the Middle East, Committee on 
International Relations, House Annex 1, Washington, D.C. 

Dear Congressman Hamilton: In recent years. Congress has 
expressed concern over the scope, level, and purpose of IJ.S. arms 
transfer and security assistance programs. Problems of special signifi- 
cance have arisen regarding American arms sales and security assist- 
ance programs in the Middle East. The various security assistance 
programs of the United States are subject to differing and increasingly 
complex requirements with respect to congressional authorization, 
appropriation, policy direction, limitations, and oversight. 

The enclosed report, prepared at your request and entitled ''U.S. 
Arms Transfer and Security Assistance Programs," draws together 
an array of information on arms transfer and security assistance 
legislation, policies, and procedures. It reviews current legislation 
concerning these programs and details the purpose, scope, limitations, 
legislative requirements and restrictions, justifications, operation, 
implementation, and reporting requirements which apply to their 
conduct and administration. 

U.S. security assistance programs are now conducted under the 
following broad categories: the military assistance program (MAP); 
the international military education and training (IMET) program; 
the foreign military sales (FMS) program; commercial sales; ship 
transfers; and security supporting assistance. It is often difficult for 
Members of Congress to become completely familiar with the full 
scope and details of the overall effort. 

It is hoped that this study will be of assistance to the Congress in 
exercising its legislative and oversight responsibilities concerning this 
important implement of American foreign and national security policy. 

The report was prepared by Dr. Herbert Y. Schandler, specialist in 
National Defense, Foreign Affairs and National Defense Division, 
Congressional Research Service. Informal comments on certain tech- 
nical aspects of the study were solicited and received from the Ofiice 
of the Under Secretary of State for Secretary Assistance, the Defense 
Security Assistance Agency, and appropriate offices in the Depart- 
ments of the Army, Navy, and Air Force. We are grateful for their 
interest, time, and generous assistance. However, we remain respon- 
sible for the contents of the study and for its conclusions. Stenographic 
assistance was provided by Miss Cheryl E. Powell. 

It has been a pleasure to be of service to your subcommittee. Please 
call if you require additional information. 
Sincerely, 

Gilbert Gude, Director. 

(VII) 



CONTENTS 



Page 

Foreword iii 

Letter of Transmittal v 

Letter of Submittal vii 

Summary xi 

I. Introduction 1 

II. Military Assistance Program (MAP): 

A. Definition 9 

B. Reduction in the program 9 

C. Legislative requirements and restrictions 12 

1. Presidential determination 12 

2. No U.S. commitment implied 13 

3. Purposes for which aid may be used 14 

4. Requirements for recipient countries 15 

5. Transfers to third countries 16 

6. Human rights 17 

7. Additional restrictions 19 

D. Presidential discretion 25 

E. Restrictions on U.S. military personnel 26 

F. Flexibility of administration 29 

G. Treaties and Defense Cooperation Agreements (DC A) 30 

H. Stockpiles for allies 31 

I. Excess defense articles 33 

J. Required reports 35 

K. Administration of the program 37 

L. Security assistance planning 39 

M. Current status 40 

III. International Military Education and Training (IMET) : 

A. Definition 43 

B. Purposes 43 

C. Limitations 44 

D. Current status 45 

IV. Foreign Military Sales (FMS): 

A. Definition 46 

B. Eligibility 46 

C. Purposes for which sales are permitted 47 

D. Sales financing program 48 

1. DOD guaranteed credit 48 

2. DOD direct credit 49 

3. Export-Import Bank direct credit 51 

E. Procurement and pricing 51 

F. Agent's fees 54 

G. Transfers to third countries 55 

H. Legislative restrictions 55 

I. Restrictions on the use of U.S. military personnel 58 

J. Congressional control 59 

K. Administration of the program 61 

L. Processing requests for arms purchases 63 

M. Reporting requirements 66 

N. Congressional interests in reducing arms sales 70 

O. President Carter's arms transfer policy 72 

P. Arms Export Control Board (AECB) 74 

Q. Current status 78 

(IX) 



V. Commercial Sales: Page 

A. Definition 82 

B. Limitations on commercial sales 82 

C. Administration of the program 84 

D. Requirements for prior approval 84 

E. Export licenses 86 

F. Agent's fees 91 

G. Additional restrictions 91 

H. Required reports 91 

I. Review of controls on nonlethal items 92 

J. Transfers of technology 93 

K. Current status 94 

VI. Ship Transfers: 

A. Definition 99 

B. Authority 101 

C. GAO report on ship transfer procedures 102 

D. Current procedures 102 

E. Current status 104 

VII. Other Security Assistance Programs: 

A. Definition 106 

B. Security supporting assistance 106 

1. Definition 106 

2. Purposes 107 

3. Flexibility of the program 108 

4. Current status 108 

C. Middle East Special Requirements Fund 110 

D. Other programs 111 

VIII. Congressional Interest 112 

Appendixes: 

I. Conventional Arms Transfer Policy Statement by the Presi- 
dent, May 19, 1977 125 

II. Military Assistance Program 127 

III. International Military Education and Training Program 129 

IV. Excess Defense Articles Program 132 

V. Foreign Military Sales Agreements 136 

VI. Foreign Military Sales Deliveries 139 

VII. Foreign Military Sales Financing Program 142 

VIII. Commercial Exports 148 

IX. Ship Transfers 152 

X. Statement by the President, February 1, 1978 174 



UNITED STATES ARMS TRANSFER AND SECURITY 
ASSISTANCE PROGRAMS 



SUMMARY 



The various arms transfer and security assistance programs of 
the United States are subject to differing requirements concerning 
congressional authorization, appropriation, limitations, and over- 
sight. It is often difficult to become completely familiar with the 
details of the overall effort. The scope, extent, and policy rationale 
of these programs has been of major congressional concern in recent 
years. One of the major complaints voiced by some Members of 
Congress has been the difficulty of first determining the full scope 
of, and then exercising legislative control and oversight over, the 
Nation's arms transfer and security assistance programs. 

This study draws together an array of information on arms transfer 
and security assistance legislation, policies, and procedures. It 
summarizes current legislation concerning U.S. security assistance 
programs and details the purpose, scope, limitations, legislative 
requirements and restrictions, justifications, operation, implementa- 
tion and reporting requirements which apply to the conduct and 
administration of these programs. 

U.S. security assistance programs, are now conducted under 
the following broad categories: the military assistance program 
(MAP) ; international military education and training (IMET) ; the 
foreign military sales (FMS) program; commercial sales; ship transfers; 
and security supporting assistance. Within each category, this 
study summarizes key information on program purposes, legislative 
authority and limitations, program administration, and current status. 

The supply of arms, weapons of war, and defense equipment to 
friends and allies has long been a major instrument of U.S. foreign 
and national security policy. Significant U.S. military supplies of 
all kinds were furnished to our allies or potential allies under the 
Lend-Lease Act. 

Postwar American aid, both military and economic, was extended 
to areas and nations devastated by war and threatened by Communist 
subversion or aggression. In the postwar period, this great effort 
in defense, economic, and political recovery was, to a great extent, 
a triumph of American leadership and initiative, especially in Western 
Europe. 

As the nations of Western Europe completed their economic re- 
covery, the military assistance programs in that area were reduced 
and arms began to be provided through cash sales. In recent years, 
trends in U.S. arms transfers have continued to reflect the declining 
use of mihtary assistance and an increasing reliance on arms sales. 

(XI) 



xn 

The military assistance program (MAP) involves the loan or 
outright grant to foreign countries of military equipment, facilities, 
technical assistance, repair and rehabilitation, supply operations 
support, and administrative support. The mihtary assistance program 
is carried out under authority of part II of the Foreign Assistance 
Act (FAA) of 1961, as amended. This act has been subject to recon- 
sideration annually by the Congress, at which time funds to carry 
out the program are authorized and later appropriated. 

The militarv' assistance program was bom in the early days of the 
cold war and the stated purpose of that program since its inception 
has been to strengthen the mutual defense and collective security of 
the non-Communist world. As such, it was a flexible instrument of 
U.S. foreign policy. However, as the original cold war rationale for 
militar}^ aid programs receded, the Congress, in recent years, has 
indicated that this program should, in general, be phased out and be 
replaced by a program of sales. Legislative authority for the military 
assistance program, however, remains intact. This program is likely 
to continue on a reduced and annually authorized basis for specific 
countries for some years to come in order to provide military assistance 
to countries with which the United States has concluded base rights 
in exchange for, inter alia, multiyear military assistance commitments. 
The program also remains available for unforeseen contingency use or 
in situations where a sales approach may be inappropriate for economic 
or foreign policy reasons. 

International military education and training (IMET), until 1976 
a part of the military assistance program, is a ^rant program for formal 
or informal instruction of foreign students m the United States or 
overseas. The purposes of such training are to encourage mutually 
beneficial relations and increased understanding between the United 
States and foreign countries and to improve the ability of participating 
countries to utilize their resources, including defense resources obtained 
from the United States, with maximum effectiveness. 

The foreign military sales (FMS) program is carried out under the 
provisions of the Arms Export Control Act (AECA), formerly the 
Foreign Military Sales Act (FMSA). That act provides for the transfer 
of arms and other military equipment, and various services, through 
govemment-to-government agreements. Under this program, the De- 
partment of Defense (DOD) purchases military equipment or services 
irom U.S. firms, or takes equipment to be sold from U.S. stocks (under 
some circumstances) and sells the equipment or services to a foreign 
government or international organization, or sells the services of DOD 
personnel such as training or management advice. This program is 
not considered "assistance" as such since there is no cost to the U.S. 
Government. These sales comprise the largest volume of U.S. arms 
transfers. 

The Arms Export Control Act (AECA) also provides authority for 
the President to finance sales of defense articles and services or to 
guarantee financing to friendly foreign countries or international 
organizations. A major purpose of AECA credit is to help economically 
less developed countries make the transition from grant aid to sales. 

As the foreign military sales program has grown, the (^ongress has 
come to feel that its controls over this program were not adequate. 
In attempting to gain increased control over and a greater voice in 
this program, the Congress, in 1974, enacted section 36(b) of the 



XUI 

Foreign Military Sales Act (later changed to the Arms Export Control 
Act). This provided for a congressional veto over individual arms sales. 
On May 9, 1977, President Carter outlined his administration's 
policy concerning arms sales. In his statement, the President indicated 
that, "The virtually unrestrained spread of conventional weaponry 
threatens stability in every region of the world." The policy announced 
by the President contained two basic elements: 

* * * The United States will henceforth view arms transfers as an exceptional 
foreign policy implement, to be used only in instances where it can be clearly 
demonstrated that the transfer contributes to our national security interests. 

* * * We will continue to utilize arms transfers to promote our security and 
the security of close friends. But, in the future, the burden of persuasion will be 
on those who favor a particular arms sale, rather than those who oppose it. 

To implement the first element of this policy — that of unilateral 
U.S. restraint in the sale of arms — the President established a set of 
six controls applicable to all future arms transfers "except to those 
countries with which we have major defense treaties (NATO, Japan, 
Australia, and New Zealand)." During the remaining months of the 
fiscal year subsequent to the President's policy announcement, the 
administration transmitted 46 separate arms sale notifications to 
Congress involving 19 separate countries and goods and services total- 
ing over $4.5 billion, including a controversial offer to sell Airborne 
Warning and Control System (AWACS) aircraft to Iran. 

These actual sales and other proposed sales called into question, in 
the minds of many in Congress, the President's announced policy of 
using arms transfers as an "exceptional foreign policy implement." 
Thus, there currently has grown a skepticism concerning the effective- 
ness of the announced policy in restricting U.S. arms exports. The 
administration, however, contends that it is too early to judge the 
effectiveness oif the President's policy. 

Commercial arms sales do not constitute a Government program as 
such, and no Government expenditures are involved. These sales 
involve the direct transfer of arms, equipment, and services between 
domestic private corporations and foreign governments (or other 
foreign purchasers). Payment is arranged on a private contract basis. 
Export licenses issued by the Department of State control the export 
of defense articles and services sold through commercial channels. 

The ship transfer program involves the grant, sale, lease, or loan 
of U.S. naval vessels to foreign governments. Except for new con- 
struction sales, ships granted or sold to friendly foreign countries 
have been determined to be no longer needed by the Navy and have 
been stricken from the U.S. Naval Vessel Register. Specific con- 
gressional authorization is required for the transfer of all capital 
ships and for all ships less than 20 years of age or in excess of 3,000 
tons. 

Security supporting assistance is designed to promote or support 
economic or political stability. It has historically been intended 
to assist countries whose economies are burdened by major defense 
programs. Basically, security supporting assistance is designed 
as budgetary support. Security supporting assistance funds normally 
contribute to some degree to the economic growth or to the develop- 
mental goals of the recipient country, but the U.S. motive in providing 
these funds is neither economic growth or development per se; rather 
the specific purpose is to stabilize the political or economic situa- 



XIV 

tion vis-a-vis a given security situation. Security supporting assist- 
ance seeks, therefore, to assist the recipient nation to overcome an 
immediate security or defense problem while avoiding deterioration 
of its national economy. This has been a flexible program which, 
through its history, has provided U.S. assistance to Western Europe, 
Southeast Asia, the Middle East, and, most recently, to Africa. 

Other programs, such as the Middle East Special Requirements 
Funds, loans to Portugal, and the international narcotics control 
program are identified as security assistance programs since they are 
provided to meet legitimate U.S. national security interests rather 
than to fulfill an obligation to the world's poor. 

Congress has attempted to gain a greater voice in establishing 
national policies involving arms transfers and security assistance 
programs through recent legislation. The International Security 
Assistance and Arms Export Control Act of 1976 (Public Law 94-329) 
overhauled the statutory framework governing these programs. To 
some extent, the procedures estabhshed in Public Law 94-329, com- 
bined with greater sensitivity on the part of the administration to the 
desires of Congress to be consulted m the formulation of arms sales 
policies and in the conduct of U.S. security assistance programs, 
have been successful in achieving greater congressional control over 
those programs. However, the Congress has expressed its concern 
that much remains to be done to insure effective congressional over- 
sight. 

Thus, in the future, regardless of the effectiveness of President 
Carter's arms transfer policy, it is likely that the Congress will seek, 
by working with the admimstration or through legislation, increased 
participation in the formulation of policy concerning U.S. security 
assistance programs. 



I. INTRODUCTION 

The supply of arms, weapons of war, and defense equipment to 
friends and allies has long been a major instrument of U.S. foreign 
and national security policy. Significant U.S. military assistance 
dates to World War II when vast quantities of military supplies 
of all kinds were furnished to our allies or potential allies 
under the Lend-Lease Act. This Act (55 Stat. 3, approved March 
11, 1941) authorized the President to manufacture "or otherwise 
procure" defense articles for any foreign government the defense 
of which the President considered "vital to the defense of the 
United States." 

Postwar aid was expected to be primarily economic, in order to 
promote the relief and recovery of Europe. However, the cold war 
quickly developed and it was determined that both American military 
and economic assistance should be extended to areas and nations 
threatened by Communist aggression or subversion. 

In an address before Congress on March 12, 1947, President 
Trumsii set forth a policy, which came to be known as the Truman 
Doctrine, of providing U.S. economic and military aid to the nations 
of the free world or those resisting aggression or subversion whether 
external of internal. 

In voting to aid Greece and Turkey under this program, the 
Congress reiterated that: 

. . . the national integrity and survival of these nations 
are of importance to the security of the United States and 

. (1) 



of all freedom-loving peoples and depend upon the receipt 
at this time of assistance; 

About fifty-nine percent of the aid provided to Greece and 
nearly 100 percent of the aid provided to Turkey in response to 
the Truman Doctrine in 1947-48 was for military purposes. 

The Greek-Turkish aid program was but the first step in the 
implementing of the Truman Doctrine. Communist moves in Europe 
became more threatening in 1948 with the seizure of Czechoslovakia 
and the Berlin blockade. In Asia, the fall of China to communism 
called into question the security of U.S. allies in that region. 
In 1949 the North Atlantic Treaty Organization (NATO) was established 
and extensive military help was provided by this country to the 
other NATO members under the Mutual Defense Assistance Act of 1949 
(63 Stat. 714, October 6, 1949). Aid was also provided under 
this Act to Iran, Korea, the Philippines and the "general area 
of China." 

As a consequence of the invasion of South Korea in 1950, 
large amounts of military assistance (in addition to American 
troops) were provided to that nation through regular Department 
of Defense appropriations, and aid to NATO countries was speeded 
up. 

The Mutual Defense Assistance Program was absorbed into the 
Mutual Security Program under the Mutual Security Act of 1954. 
Under this Act, the purpose of the program became: 



...to maintain the security and to promote the foreign 
policy of the United States... to strengthen mutual security 
and individual and collective defenses of the free world, 
to develop their resources in the interest of their security 
and independence and the national interest of the United 
States and to facilitate the effective participation of those 
countries in the United Nations system for collective security. 

The Foreign Assistance Act of 1961 (75 Stat. 424, September 4, 

1961) repealed and superseded portions of the Mutual Security Act. 

Section 502 of this Act (redesignated Section 501 in 1967) reiterated 

the belief of Congress that "the security of the United States 

is strengthened by the security of other free and independent 

countries." It is, therefore, the intention of the Congress, 

this section stated: 

. . .to promote the peace of the world and the foreign policy, 
security, and general welfare of the United States by fostering 
an improved climate of political independence and individual 
liberty, improving the ability of friendly countries and inter- 
national organizations to deter, or, if necessary, defeat 
Communist or Communist-supported aggression, facilitating 
arrangements for individual and collective security, assisting 
friendly countries to maintain internal security, and creating 
an environment of security and stability in the developing 
friendly countries essential to their more rapid social, eco- 
nomic, and political progress. 

This section has remained largely unchanged to the present time. 

During the period 1964-1966, as the nations of Western 

Europe completed their economic recovery, the grant military aid 

programs in that area were reduced and arms began to be provided 

through sales. Grant aid from that time on has been directed 

primarily to the so-called "forward defense" nations of Taiwan, 



Korea, Greece and Turkey and to nations where the U.S. maintained 
significant military bases, such as the Philippines, Spain and 
Ethiopia. In Fiscal Year 1967, executive branch requests and 
congressional appropriations for the military assistance program 
dropped below $1 billion and the Military Assistance Program (MAP) 
has remained well below that figure ever since. Thus, Fiscal Year 
1967 marked the crossover from an emphasis on grant aid to an 
emphasis on military sales. 

In the postwar period, this great effort of defense (as well 
as economic and political) recovery was, to a great extent, a 
triumph of American leadership and initiative, especially in Western 
Europe. In recent years, however, trends in U.S. arras transfers 
have continued to reflect the declining use of military assistance 
and an increasing reliance on arms sales. The Military Assistance 
Program (MAP) has been reduced from $5.7 billion in Fiscal Year 
1952 to $0.22 billion in Fiscal Year 1978. Conversely, the U.S. 
Foreign Military Sales (FMS) program has grown from $1.6 billion 
in Fiscal Year 1971 to $11.2 billion in sales agreements in Fiscal 
Year 1977. The most dramatic increase in the Foreign Military 
Sales (FMS) program has been the sale of large amounts of defense 
articles and services to Israel and to the oil producing states 
of the Middle East . 



Congress has recognized the contribution of these sales to 

American foreign policy interests and objectives. The Arms Export 

Control Act (AECA), which authorizes the FMS program, charges the 

Secretary of State with the responsibility for insuring that U.S. 

arms sales "... are integrated with other U.S. activities and 

the foreign policy of the United States is best served thereby." 

In that same Act, the Congress has stated that: 

... it remains the policy of the United States to 
facilitate the common defense by entering into inter- 
national agreements with friendly countries which further 
the objective of applying agreed resources of each country 
to programs and projects of cooperative exchanges of 
data, research, development, production, procurement, 
and logistics support to achieve specific national defense 
requirements and objectives of mutual concern. To that 
end, this Act authorizes sales by the United States 
Government to friendly countries. . . in furtherance 
of the security objectives of the United States. 

U.S. security assistance programs are now conducted under the 
following broad categories: the Military Assistance Program (MAP); 
International Military Education and Training (IMET) ; Foreign 
Military Sales (FMS) Program; Commercial Sales; Ship Transfers; 
and Security Supporting Assistance. These programs have varied 
in importance and in dollar amounts over the years. 

Proponents of U.S. arms transfer programs state that these 
transfers provide the President with an important tool in the conduct 
of America foreign policy. They are advantageous to the U.S., it 
is claimed, in that they have allowed recipient countries to maintain 
internal order and have increased the prospects for regional stability 



6 



in areas of the world important to the United States, thereby 
reducing the likelihood of direct U.S. military involvement. In 
addition, it is claimed that standardization of materiel, doctrine, 
and training is enhanced among our allies and friends. Other claimed 
advantages include maintaining the U.S. arms production base which 
can be diverted to U.S. use in an emergency, increasing U.S. employ- 
ment, aiding the U.S. balance of payments, and reducing unit costs 
of equipment to U.S. forces through larger production runs and 
because research and development costs are partially recovered. 
Also, it is claimed that cooperation and closer relations are main- 
tained with recipient nations through arms transfers, resupply, 
logistics, and training commitments. Foreign dependence on U.S. 
logistic support is created and additional training is provided 
for U.S. personnel. Further, it is argued that, if the U.S. 
restricted the sale of arms or refused to sell or grant arms, 
current recipients would merely obtain them from other sources 
and the advantages would accrue to other nations. In addition it 
is claimed, by insuring that friendly nations have a dependable 
source of conventional arms for their security requirements, 
the urge to build their own armaments industry, or in some cases, 
to develop their own nuclear weapons is removed. 

Critics of the arms transfer programs, on the other hand, 
maintain that they no longer serve the security purposes for 
which the program was established are now used primarily for less 
justifiable political or economic objectives. It is further 
contended that these programs have been conducted rather in- 
discriminately, with little policy guidance from the Administration, 



and that they contribute to and even stimulate regional arms races, 
encouraging certain regimes to give undue attention to military as 
opposed to social-economic development. Arms transfers are also 
said to link the United States with regimes prone to practices 
inimical to our concepts of human dignity, to provide the U.S. 
with little or no influence on the policies of the recipient countries 
or the use to which these arms may be used, to promote regional 
instability, and to increase the ability and the willingness of 
these nations to resort to force to settle international disputes. 
Moreover, it is alleged, this massive transfer of weapons, technology, 
and training reduces U.S. force readiness, creates military commit- 
ments, and could involve the U.S. in international disputes which 
may be contrary to the vital interests of this nation. 

The various arms transfer and security assistance programs of 
the United States are subject to differing requirements concerning 
Congressional authorization, appropriation, limitations, and over- 
sight. It is often difficult to become completely familiar with 
the details of the overall effort. One of the major complaints 
voiced by some Members of Congress has been the difficulty, first 
of determining the extent of, and then of exercising legislative 
control and oversight over, the full scope of the nation's arms 
transfer and security assistance programs. 



This paper will summarize current legislation concerning U.S. 
security assistance programs, and will detail the purpose, scope, 
limitations, legislative requirements, justifications, operation, 
and reporting requirements to the Congress which apply to the conduct 
and administration of these programs. 



II. MILITARY ASSISTANCE PROGRAM (MAP) 

A. DEFINITI ON 

The Military Assistance Program (MAP), also called 'rant 
Military Assistance, involves the loan or outright grant to foreign 
countries of military equipment, facilities, technical assistnce, 
repair and rehabilitation, supply operations support, and administra- 
tive support.* The Military Assistance Program is carried out under 
authority of Part II of the Foreign Assistance Act (FAA) of 1961, 
as amended. This Act has been subject annually to reconsideration 
by the Congress, at which time funds to carry out the program are 
authorized and later appropriated. 

B. REDUCTION IN THE PROGRAM 

As indicated in the Introduction, the Military Assistance 
Program (MAP) was born in the early days of the Cold War and the 
purposes of the program as enacted in legislation reflect that 
origin. As the nations of Western Europe completed their recovery, 
and as the original rationale for military aid programs receded. 



* Beginning with the Supplemental Defense Appropriation Act 
of 1966, one of the single largest categories of grant aid — that 
of aid to South Vietnam and for other free world forces in Vietnam — 
was provided through regular Department of Defense appropriations 
under the Military Assistance Service Fund (t-IASF) account. In FY 
1968, aid to Laos and Thailand was similarly transferred out of MAP 
and placed under MASF. In FY 1973, military aid to Thailand was 
again authorized by the Foreign Assistance Act of 1961, rather 
than the DOD Appropriation Authorization Acts. Funds for Laos 
were returned to MAP funding in FY 1975. MASF expenditures are 
not included in MAP totals cited herein. 



10 



Congress in recent years, has sought the reduction of and event ici 
termination of this program. 

Section 501, FAA, states the sense of Congress that, in the 
administration of the military assistance program, "priority shall 
be given to the needs of those countries in danger of becoming 
victims of active Communist or Communist-supported aggression or 
those countries in which the internal security is threatened by 
Communist-supported internal subversion." 

Section 505(c) of that Act requires the President to reduce 
and terminate, as relevant conditions permit, grant aid to a country 
having sufficient wealth to enable it, in the judgment of the 
President, to maintain and equip its own military forces in adequate 
strength without undue burden to its economy. Section 620(m) further 
prohibits the furnishing of assistance on a grant basis to any 
economically developed country capable of sustaining its own defense 
burden and economic growth, except for orientation and training 
grants not to exceed $500,000 each fiscal year. 

The Senate had included a provision for a three-year phase- 
out of the military assistance program (other than training) in 
its consideration of the Foreign Assistance Act of 1974. 



11 



In its report on this bill, the Senate Foreign Relations Committee 

expressed its view that military assistance should be provided "not as 

a habit, but rather only in specific instances where such assistance 

J,/ 
is clearly warranted." The House, however, refused to accept that 

amendment and the bill as passed contained the following provision 

(Section 17): 

(a) It is the sense of Congress that the policies and pur- 
poses of the military assistance program conducted 
under chapter 2 of part II of the Foreign Assistance 
Act of 1961 should be reexamined in light of changes 
in world conditions and the economic position of the 
United States in relation to countries receiving such 
assistance; and that the program, except for military 
education and training activities, should be reduced 
and terminated as rapidly as feasible consistent with 
the security and foreign policy requirements of the 
United States. 

(b) In order to give effect to the sense of Congress ex- 
pressed in subsection (a), the President is directed 
to submit to the first session of the 94th Congress 

a detailed plan for the reduction and eventual elimi- 
nation of the present military assistance program. 

In his response to that requirement, the President reported, 

on January 20, 1976, that "grant military assistance in some form 

will remain a basic requirement of U.S. foreign policy for the 

foreseeable future," and urged the Congress "to preserve the 

authorities in law to provide grant military aid, an instrument 

of our national security and foreign policy that has served the 

national interest well for more than 30 years." 



\J U.S. Congress. Senate Committee on Foreign Relations. 
Senate Report No. 93-1299, 93d Congress, 2d Session, November 27, 1974, 



12 



The International Security Assisance and Arms Export Control 
Act of 1976 (P.L. 94-329), which was signed by the President on 
June 30, 1976, amended the FAA to provide for the termination 
of the Military Assistance Program after September 30, 1977, 
except to the extent that Congress might subsequently authorize 
such assistance for specified countries in specified amounts (Section 
516, FAA). This, in effect, retained the legislative authority for 
military assistance as recommended by the President while providing 
a strict congressional control over that program. 

C. LEGISLATIVE REQUIREMENTS AND RESTRICTIONS 

In addition to the requirement for specific authorization 
on a country-by-country basis by the Congress, however, P.L. 94- 
329 and subsequent legislation (P.L. 95-92) left intact many 
additional requirements and limitations of a substantive nature 
concerning the provision of military assistance by the United States. 
(All references are to the Foreign Assistanct Act of 1961, as 
amended, unless otherwise indicated). 
1. Presidential Determination 

In order for a country or international organization to 
receive grant military aid, the President must first determine 
that the granting of such aid "will strengthen the security of 
the United States and promote world peace" (Sec. 503a). Indeed, 



13 



Section 504(b), FAA, directs the President to establish procedures 
for programming and budgeting to insure that military assistance 
programs "come into direct competition for financial support with 
other activities and programs of the Department of Defense" so as 
to insure that "a dollar spent on military assistance to foreign 
countries is as necessary as a dollar spent for the United States 
military establishment." 

The Foreign Assistance Act also constrains the President, 
in determining whether to provide assistance to any country, to 
take into account the status of that country with respect to its 
dues, assessments, and other obligations to the United Nations 
(Section 620 (u)). In addition, the President shall adopt regula- 
tions and establish procedures to insure that U.S. aid is not used 
in a manner which, contrary to the best interests of the U.S., 
promotes or assists foreign aid projects or activities of the 
Communist -bloc countries (Section 620(h)). 

2. No. U.S. Commitment Implied 

In answer to the specific charge that U.S. security assistance 
to a particular nation implied an American military commitment to 
the defense of that nation. Section 650 of the FAA states that 
"the furnishing of economic, military, or other assistance under 
this Act shall be not construed as creating a new commitment or 
as affecting any existing commitment to use Armed Forces of the 
United States for the defense of any foreign country." 



14 



3. Purposes for Which Aid May be Used 

Section 502 of the Act lists the purposes for which grant 

aid may be used. Articles and services provided are furnished: 

...solely for internal security, for legitimate self- 
defense, to permit the recipient country to participate 
in regional or collective arrangements or measures 
consistent with the Charter of the United Nations, or 
otherwise to permit the recipient country to participate 
in collective measures requested by the United Nations 
for the purpose of maintaining or restoring international 
peace and security, or for the purpose of assisting 
foreign military forces in less developed friendly countries 
(or the voluntary efforts of personnel of the Armed Forces 
of the United States in such countries) to construct public 
works and to engage in other activities helpful to the economic 
and social development of such friendly countries. 

The United States can, of course, enter into agreements for uses 
of military articles more limited than the purposes indicated above. 

Section 505(d) requires that assistance as well as deliveries 
of assistance shall be terminated to any country which uses U.S.- 
furnished defense articles or services "in substantial violation" 
of the purposes for which furnished, or which transfers these articles 
or permits their use by another country without permission of the 
President, or which fails to maintain the security of such articles. 

Assistance and deliveries of assistance will be terminated if the 
President determines that such violations have occurred and states 
this in writing to the Congress, or if the Congress so determines 
by joint resolution. Assistance to the country shall remain term- 
inated until the President determines the violation has ceased 
and the country concerned has given satisfactory assurances that 
such violation will not recur. 



15 



^ Requirements for Recipient Countries 

The country receiving military aid must agree, under the pro- 
visions of Section 505(a), that it will not, without consent, permit 
the use of furnished defense articles by anyone who is not an officer, 
employee, or agent of that country; permit the transfer of such 
articles to another nation; or use or permit the use of such articles 
for purposes other than those for which furnished. Under this same 
section, the country must also agree that it will provide substan- 
tially the same degree of security protection afforded to such articles 
by the United States Government; that it will permit continuous 
observation and review by, and furnish necessary information to, 
representatives of the United States Government with regard to the 
use of such articles; and that it will return to the United States 
Government those articles no longer needed for the purposes for 
which furnished, unless the President consents to other disposition. 
In the case of other disposition, the country must agree, under 
Section 505(f), that "the net proceeds of sale" which it receives 
in disposing of MAP-furnished defense articles "will be paid to 
the U.S. Government." 

Countries that agree to the above-mentioned qualifications 
and that are not subject to additional restrictions, which will 
be discussed later, are eligible to receive assistance of no more 
than $3.0 million in a given fiscal year. Should it be desirable 



16 



to furnish MAP defense articles in excess of $3.0 million, the Presi- 
dent must make a further determination, under Section 505(b), to the 
effect that the country conforms to the purposes and principles of 
the Charter of the United Nations; that the defense articles will be 
utilized for the maintenance of the recipient's own defensive strength, 
or the defensive strength of the free world; that the country is taking 
all reasonable measures, consistent with its political and economic 
stability, to develop its defense capacities; and that the increased 
ability of the country to defend itself is important to the security 
of the United States. 

5. Transfers to Third Countries 

The President shall not consent to a transfer of U. S. -furnished 
significant defense articles to a third country unless the United 
States would itself transfer the defense articles under consideration 
to that country. In addition, the country requesting consent to a 
transfer must agree to demilitarize the defense articles prior to 
transfer, or the proposed recipient country must provide a commitment 
in writing to the United States Government that it will not further 
transfer the articles, unless demilitarized, to another country or 
person without United States consent (Section 505(e)). 

The President, further, shall not give his consent until 
he submits a written certification to the Congress concerning the 
transfer, listing the article to be transferred and its acquisition 



17 



cost, the country transferring the article, the recipient, and the 
reasons for the proposed transfer. Unless the President also states 
that an emergency exists which requires the immediate transfer of 
the article in the national security interests of the United States, 
his consent to any transfer shall not become effective until thirty 
(30) calendar days after notification to the Congress and only if, 
within that thirty day period, the Congress does not adopt a con- 
current resolution disapproving the transfer (Section 3(d), Arms 
Export Control Act). 

These restrictions on transfers do not apply, however, to 
transfers of maintenance, repair, or overhaul defense services, or 
articles or parts used in such services, if the transfer will not 
result in any increase in the military capability of the articles to 
be maintained, repaired or overhauled. Similarly, these provisions 
do not apply to temporary transfers of defense articles for the sole 
purpose of receiving maintenance, overhaul, or repair, nor to coopera- 
tive cross servicing arrangements among members of NATO. In addition, 
consent is not required by law, but by executive branch regulation, 
for the transfer of items produced abroad under U.S. Government license. 
The law requires consent only where the item to be transferred was 
itself originally transferred by the U.S. Government to the proposed 
government . 

6. Human Rights 

Section 502B(a)(3), FAA, directs the President to "formulate 
and conduct international security assistance programs ... in a manner 



18 



which will promote and advance human rights and avoid identification 
of the United States, through such programs, with governments 
which deny to their people internationally recognized human 
rights, and fundamental freedoms." Thus, Section 502B(a)(2) 
specifies that "no security assistance may be provided to any country 
the government of which engages in a consistent pattern of gross 
violations of internationally recognized human rights." For 
purposes of this section of the Act, security assistance is 
defined to include military assistance, international military 
education and training, cash or credit sales of defense articles 
and services under the Foreign Military Sales (FMS) program, 
commercial sales, and security supporting assistance (to include 
assistance to the Middle East). "Gross violations of internationally 
recognized human rights" is defined, for purposes of this section, 
to include "torture or cruel, inhuman, or degrading treatment or 
punishment, prolonged detention without charges and trial, and other 
flagrant denial of the right to life, liberty, or the security of 
person" (Section 502B(d)). 

Section 502B(b) requires that a report with respect to the 
observance of and respect for "internationally recognized human rights' 
for each country proposed as a recipient of security assistance (as 
defined above) be provided the Congress as a part of the Administra- 
tion's presentation material for security assistance programs. In 
addition, the Congress may request statements concerning observance 



19 



of and respect for human rights for specific countries. Any time 
after receiving such a statement (required within 30 days of the 
request), the Congress may adopt a joint resolution terminating, 
restricting, or continuing security assistance for that country. 

7. Additional Restrictions 

Throughout the years , Congress has carefully examined military 
Assistance Program (MAP) authorizations and expenditures and has 
enacted a series of additional restrictions on the use of funds 
authorized and appropriated for this program. Among current restric- 
tions are the following (references are to the Foreign Assistance 
Act (FAA) of 1961, as amended, unless otherwise indicated): 

a. No military assistance may be provided other than 

to countries specifically authorized by legislation. 
(In FY 1978, these countries are Greece, Portugal, 
Spain, Turkey, Jordan, Indonesia, Philippines, Thai- 
land) (Section 504(a)(2)). 

b. No assistance should be furnished countries which, 
through laws, regulations, policies, or government 
practices, prevent any "United States person" from 
participating in the furnishing of defense articles 
or services on the basis of race, religion, national 
origin or sex (Section 505(g)). 

c. No assistance shall be furnished to any country un- 
less the President determines that "such country is 
not dominated or controlled by the international 
Communist movement" (Section 620(b)), and no assistance 
may be furnished to any Communist country unless 

the President finds (and reports to the Congress) 
that such assistance is vital to the security of 
the United States, the recipient country is not 
controlled by "the international Communist conspiracy," 
and that such assistance will further promote the 
independence of the recipient country from inter- 
national communism (Section 620(f)). 



20 



No assistance shall be furnished the present govern- 
ment of Cuba (Section 664). 

No assistance shall be provided to any country 
(unless the President finds such action contrary to 
national security) which is indebted to any U.S. 
citizen for goods and services furnished where 
such citizen has exhausted available legal remedies 
or the debt is not denied or contested by such 
government (Section 620(c)). 

No assistance shall be provided to any country 
which the President determines is engaging in or 
preparing for aggressive military efforts directed 
against the United States, an aid recipient country, 
or any country to which PL 480 sales are made, 
unless the President determines that such military 
efforts or preparations have ceased and he reports 
to the Congress that he has received satisfactory 
assurances that such military efforts or prepara- 
tion will not be renewed (Section 620(i)). 

The President shall suspend assistance to any 
country which has nationalized, seized, or ex- 
propriated property owned by any United States 
citizen, corporation, partnership, or organization, 
or has taken steps to repudiate or nullify con- 
tracts or agreements or has imposed or enforced 
discriminatory taxes (or other conditions or 
actions) which have the effect of nationalizing, 
expropriating, or seizing US-owned property and 
fails to take action within a reasonable time 
to compensate for such property. This provision 
can be waived by a Presidential certification 
to Congress that such waiver is important to the 
national interests of the United States (Section 
620(e)). 



21 



h. After July 1, 1975, no funds shall be used to 

provide training, advice, or any financial support, 
for police, prisons, or other law enforcement forces 
for any foreign government or any program of internal 
intelligence or surveillance on behalf of any 
foreign government within the United States or abroad 
(Sec. 660). 

i. All assistance under this Act shall be terminated 
to any country which aids or abets any group 
that has committed an act of international terrorism 
by granting sanctuary from prosecution, unless 
the President finds national security to require 
otherwise and so reports to Congress (Section 620A) . 

j. No military or security supporting assistance, 
grant military education or training, or credits 
or guaranties may be provided any country which 
receives or delivers nuclear enrichment equipment, 
materials, or technology unless both countries 
concerned have agreed to place this equipment, 
etc., under multilateral auspices and management, 
when available, and the recipient country agrees 
to place such equipment, etc., under the safe- 
guards system of the International Atomic Energy 
Agency, unless the President determines and 
certifies in writing to the Congress that: (a) 
the termination of such assistance would have a 
serious adverse effect on vital U.S. interests; 
and (b) he has received reliable assurances that 
the country in question will not acquire or develop 
nuclear weapons or assist other nations in doing 
so (Section 669). 

k. No military or security supporting assistance, 
grant military education or training, or credits 
or guaranties may be provided to any country which 
delivers or receives nuclear reprocessing equipment, 
materials, or technology, or to any non-nuclear- 
weapon state which detonates a nuclear explosive 
device, unless the President determines and certifies 
to the Congress in writing that the termination 
of such assistance would be "seriously prejudicial 
to the achievement of United States nonproliferation 
objectives'' or would otherwise jeopardize the common 
defense and security (Section 670). 



22 



1. No assistance can be furnished which would have the 
effect of promoting or augmenting the capability 
of any nation, group, organization, movement, or 
individual to conduct military or paramilitary opera- 
tions in Angola (Section 404, International Security 
Assistance Act of 1976). 

m. No military assistance, security supporting 
assistance, military education and training, 
credits, guaranties, cash sales, or export 
licenses may be provided Chile (Section 406, 
International Security Assistance Act of 1976). 

n. All military assistance and sales to the Govern- 
ment of Turkey shall be suspended unless and 
until the President determines and certifies 
to the Congress that Turkey is in compliance 
with U.S. laws governing the use of such assistance 
and sales and that substantial progress toward 
agreement regarding military forces in Cyprus 
has been made. However, the President may suspend 
this prohibition for cash and credit sales for 
defense items which he determines are necessary 
to enable Turkey to fulfill her defense responsi- 
bilities as a member of NATO. Sales shall be 
limited, however, to $175 million in FY 1978 
(Section 620(x)). 

o. No military assistance, security supporting 
assistance, military education and training, 
credits, guaranties, military sales, or the granting 
of export licenses for the commercial sales of 
arms may be made to Argentina after September 30, 
1978 (Section 620B). 

p. The aggregate total of military assistance and 
of credit military sales (except training) shall 
not exceed $40 million in each fiscal year for 
African countries, unless the President determines 
that a waiver of this provision is important to 
the security of the United States and so reports 
to the Congress (Section 33, Arms Export Control 
Act). 

q. If a country contains a base constructed, main- 
tained, or operated with U.S. funds, or from which 
U.S. military personnel carry out operations, no 
assistance may be provided until the President has 



23 



determined that the government of the country has 
authorized access to that base on a regular basis 
to bona fide news media correspondents of the 
United States (Section 659). 

r. No funds may be expended by or on behalf of the 
Central Intelligence Agency for operations in 
foreign countries, other than those intended solely 
to obtain necessary intelligence, unless and until 
the President finds that such operation is important 
to the national security and reports, in a timely 
fashion, a description and scope of such operation 
to the appropriate committees of the Congress. 
This restriction does not apply, however, during 
military operations initiated by the United States 
(Section 662) . 

s. No assistance of any kind may be furnished during 
FY 1978 for the purpose of, or which would have the 
effect of, promoting or augmenting, directly or 
indirectly, any military or paramilitary operations 
in Zaire, unless the President determines that such 
assistance should be furnished in the national 
security interest of the U.S. and submits to the 
Congress a detailed explanation of this determina- 
tion (Section 25, International Security Assistance 
Act of 1977 (P.L. 95-92)). 

t. No monetary assistance may be made to any government 

for the purpose of compensating owners for expropriated 
or nationalized property. If the President finds 
that such assistance has been used for such purpose, 
no further assistance shall be furnished until 
appropriated reimbursement to the United States for 
funds so used has been made (Section 620(g)). 

u. No funds for FY 1978 may be used to finance the 
construction, operation, or maintenance of, or 
supply of fuel for, any nuclear power plant (Section 
14, International Security Assistance Act of 1977). 

The following additional restrictions are included in the 

Foreign Assistance and Related Programs Appropriations Act, 1978 

(P.L. 95-148, October 31, 1977) concerning funds appropriated or 

made available under that Act: 



24 



No funds provided for military assistance shall be 
available for the purchase of new automotive vehicles 
outside of the United States. 

No funds may be used to make any payments on con- 
tracts to which the U.S. is a party entered into 
after October 31, 1977 which does not contain a 
provision authorizing the termination of that con- 
tract for the convenience of the United States 
(Section 104). 

No appropriated funds may be used to finance directly 
any assistance or reparations to Uganda, Cambodia, 
Laos, or the Socialist Republic of Vietnam (Section 107) 

No funds may be used to provide security assistance to 
any country for the purpose of aiding directly the 
efforts of that country to repress the legitimate 
rights of its population contrary to the Universial 
Declaration of Human Rights (Section 113). 

No funds may be used to finance directly any assistance 
to Mozambique or Angola (Section 114). 

No funds may be used to provide military assistance, 
international military education and training, or 
foreign military credit sales to Ethiopia and 
Uruguay (Section 503A) . 

No funds shall be used to furnish assistance to any 
country which is in default in excess of one calendar 
year in payment of principal or interest on any loan 
made to that country under this Act unless the 
country has disputed the debt or has taken steps to 
cure the existing default (Section 503). 

Not more than $18.1 million shall be used for 
military assistance, not more than $1.85 million shall 
be used for foreign military credit sales, and not 
more than $700,000 shall be used for military educa- 
tion and training to the Government of the Philippines 
(Section 503C). 



25 



p. PRESIDENTIAL DISCRETION 

Beyond these prohibitions, the Foreign Assistance Act gives 
the President certain discretion in the granting or terminating 
of military assistance. These circumstances are as follows: 

a. The President "shall consider" terminating assistance 
to any country which permits, or fails to take 
adequate measures to prevent, the damage or destruc- 
tion by mob action of United States property with- 
in such country, and fails to take appropriate 
measures to prevent a recurrence thereof and to 
provide adequate compensation for such damage or 
destruction (Section 620(j)). 

b. The President can deny assistance under the Act 

to the government of any less developed country which 
has failed to enter into an agreement with the U.S. 
to institute an investment guaranty program providing 
protection against inconvertibility, expropriation 
or confiscation (Section 620(1)). 

c. Assistance may be excluded from any country which 
seizes or imposes any penalty or sanction against 
a U.S. fishing vessel on account of its fishing 
activities in international waters (Section 620(o)). 

d. Section 481(a) provides for the suspension of 
economic and military assistance furnished under 

the FAA or any other act when the President determines 
that the government of a country has failed to take 
adequate steps to prevent narcotic drugs and other 
controlled substances produced or processed in such 
country or transported through such country, from 
being sold illegally within the jurisdiction of 
such country to U.S. Government personnel or their 
dependents or from entering the United States 
unlawfully. 

e. V7ithin 60 days after receiving information which 
substantitates that officials of a foreign country 
receiving international security assistance have 
(1) received illegal or otherwise improper pay- 
ments from a United States corporation in return 



26 



for a contract to purchase defense articles or services 
from such corporation, or (2) extorted, or attempted to 
extort, money or other things of value in return for 
actions by officials of that country that permit a 
United States citizen or corporation to conduct business 
in that country, the President shall submit to Congress 
a report outlining the circumstances of such payment 
or extortion. The report shall contain a recommenda- 
tion from the President as to whether the United 
States should continue a security assistance program 
for that country (Section 607, International Security 
Assistance and Arms Export Control Act of 1976). 



E. RESTRICTIONS ON U.S. MILITARY PERSONNEL 



Other legislative provisions limit the number of U.S. military 
personnel which may be assigned duties related to the military assistance 
program. Title I of the Foreign Assistance Appropriation Act of 
1975 (P.L. 94-11) provides that no more than twenty (20) general or 
flag officers may be assigned or detailed to military assistance 
advisory groups, military missions, or similar organizations, or to 
duties primarily involved in military assistance or foreign military 
sales activities. 

Section 515, FAA, provides that no military assistance advisory 
group, military mission or other organization of U.S. military 
personnel performing similar military functions may operate in 
any foreign country unless specifically authorized by Congress. 
This requirement for specific Congressional authorization, however, 
does not apply to regular units of the U.S. Armed Forces engaged 
in routine functions designed to bring about standardization of 
military operations and procedures between the U.S. and its "defense 
treaty allies." 



27 



For FY 1978, Congress authorized these organizations in only 
fifteen countries (the eight countries authorized grant military 
assistance — Greece, Portugal, Spain, Turkey, Jordan, Indonesia, 
Philippines, and Thailand — plus Korea, Panama, Brazil, Morocco, 
Iran, Kuwait, and Saudi Arabia). Section 515(b)(1), FAA, further 
specifies that members of the armed forces so assigned shall have 
as their primary functions those of logistics management, fiscal 
management, transportation, and contract administration of country 
programs. It is the sense of Congress, this section further states, 
"that advisory and training assistance in the countries specified 
above shall primarily be provided by personnel who are not assigned 
under this subsection and who are detailed for limited periods 
to perform specific tasks." Military personnel in excess of six 
assigned to Iran, Kuwait, and Saudi Arabia will be on a fully 
reimbursable basis (Section 515(b)(3)), and the total number of 
U.S. Armed Forces personnel assigned to the fifteen countries 
may not exceed the number justified to Congress, unless Congress 
is notified of any increase (Section 515(b)(2)). 

In countries where a military assistance advisory group or 
similar organization is not authorized, the President may assign 
up to three (3) Armed Forces personnel to perform accounting and 
other management functions with respect to U.S. security assistance 
programs. Three additional personnel may be assigned when specifically 



28 



requested by the Chief of the Diplomatic Mission as necessary to 
the efficient operation of the Mission (Section 515(c)). The total 
number of members of the U.S. Armed Forces assigned to foreign 
countries in regard to security assistance programs may not exceed 
865 for FY 1978 (Section 515(d)). All members so assigned serve 
under the directiona and supervision of the Chief of the United 
States Diplomatic Mission in each particular country (Section 515(e)). 

Defense attaches may perform overseas management functions 
for U.S. security assistance programs only if the President determines 
that this is the most economic and efficient means of performing 
such functions, and so reports to the Congress with a description 
of the number of personnel involved and the reasons for his determina- 
tion. In any case, the number of defense attaches performing such 
functions in a country may not exceed the number of defense attaches 
authorized to be assigned to that country on December 21, 1976 
(Section 515(f)). 

The entire costs (including salaries of United States military 
personnel) of the overseas management of international security assist- 
ance programs will be charged to or reimbursed from funds made 
available under Chapter II (MAP), Part II, of the Foreign Assistance 
Act (Section 515(g)). 



29 



F . FLEXIBILITY OF ADMINISTRATION 

Some flexibility is provided the Administration in the conduct 
of the military assistance program. The ceiling amounts specifically 
established for the eight countries concerned may be increased by 
not more than ten percent (10%) if the President deems such increase 
necessary (Section 504(a)(1)). Funds may be used for the winding up 
of military assistance programs or for other costs incurred in loans 
of defense articles to countries no longer eligible for military 
assistance (Section 515(b)). Section 614 authorizes the President 
the sum of $250 million, plus $100 million in foreign countries, "for 
the use .. .without regard to the requirements of this Act." This 
authority, however, was limited by the International Security Assistance 
Act of 1977, which amended the FAA to preclude an increase in any amount 
specifically authorized (other than the 10% increase authorized) or to 
provide assistance to any country not specifically authorized (Section 504 
(a)(3)). Section 506 authorizes the President to order defense articles 
from the stocks of the Department of Defense and defense services not to 
exceed a total value of $67.5 million in any fiscal year, to a foreign 
country or international organization provided he reports to the Congress 
that (a) an unforeseen emergency exists which requires immediate military 
assistance; (b) that a failure to respond immediately will result in 
serious harm to vital U.S. security interests; and (c) that the emergency 



30 



requirement cannot be met under authority of any other law. However, 
section 505(a)(2) states that this authority shall be effective in any 
fiscal year only to the extent provided in an appropriation act. This 
provision, therefore, limits this presidential discretion to the extent 
that Congress fails to appropriate funds for this purpose. 

Section 663 allows the President, "not withstanding any other 
provision of law," to furnish military assistance in exchange for 
"any necessary or strategic raw material," to include petroleum, 
other fossil fuels, metals, minerals, or any other natural substance 
which the President determines is in short supply in the United States. 

G. TREATIES AND DEFENSE COOPERATION AGREEMENTS (PCA) 

The military assistance implications of treaties and defense 
cooperation agreements have also been addressed by the Congress. 
Both the Treaty of Friendship and Cooperation with Spain, to which 
the Senate gave its advice and consent to ratification on June 
21, 1976, and the Defense Cooperation Agreement with Turkey, 
signed March 26, 1976, on which hearings were conducted by the 
Senate, contained multi-year commitments for security assistance 
to those countries. It was felt by many in the Congress that 
congressional approval of those agreements would constitute multi-year 
authorizations for military assistance in the amounts indicated 
in the agreements. This tendency toward multi-year military assistance 



31 



commitments, some felt, would tend to undermine congressional 

control over the program exercised through yearly authorization 

and appropriation. This argument was specifically met and dealt 

with by the Senate, which included the following declaration as 

part of the resolution of ratification of the Spanish Treaty: 

The sums referred to.... shall be made available for 
obligation through the normal procedures of the Congress, 
including the process of prior authorization and annual 
appropriations, and shall be provided to Spain in 
accordance with the provisions of foreign assistance 
and related legislation. 

In addition, Section 22 of the International Security Assistance 

Act of 1977 (P.L. 95-92) authorized funds for FY 1978 as might be 

necessary to carry out international agreements with Greece and 

Turkey, but prohibited the obligation or expenditure of those funds 

until Congress had enacted legislation approving such agreements. 

To date, no such legislation has been enacted. 

H. STOCKPILES FOR ALLIES 

During hearings on the annual Foreign Assistance Authoriza- 
tion Bill in 1974, the Congress learned that since 1972 the Depart- 
ment of Defense had been stockpiling arms and equipment for possible 
use by South Vietnam, Thailand, and Korea in the event of future 
hostilities. These items were funded under the Department of 
Defense budget category, "Support of Other Nations." A General 
Accounting Office (GAO) report requested by the Congress showed 



32 



that these stocks, particularly ammunition, were not segregated 
from U.S. reserve stocks and, in general consisted of older articles 
replaced by the modernization of U.S. forces equipment through new 
procurement. These old reserve stocks were than made available to 
allies as excess to U.S. defense needs pursuant to applicable legisla- 
tion, e.g. the FAA or the AECA. 

The Congress felt that this program was an unintended addi- 
tion to the Military Assistance Program through the use of Defense 
Department funds. If a stockpile for foreign military forces was 
warranted, the Congress felt, it should be justified as a part of 
the regular foreign aid program and paid for out of foreign aid 
funds . 

Consequently, Section 514 was added to the Foreign Assistance 
Act. That section, as subsequently amended, stated that no defense 
article set aside or in any way earmarked or intended for future 
use by any foreign country could be made available unless the transfer 
were authorized by legislation and the value of the transfer charged 
against funds authorized for that purpose. The value of such transfers 
were defined as acquisition cost plus crating, packaging, handling, and 
transportation costs incurred. 

In addition, this section required that the value of war reserve 
stocks to be set aside in stockpiles located in foreign countries 
(other than for NATO purposes) in any fiscal year must be authorized 



33 



by the Congress in security assistance authorizing legislation. The 
value of such additions to stockpiles in foreign countries authorized 
for FY 1978 is $270 million. 

I. EXCESS DEFENSE ARTICLES 



Section 502A, FAA, requires that excess defense articles shall 
be provided to satisfy requirements under the Military Assistance 
Program (MAP) whenever possible rather than the procurement of new 
items. Excess defense articles are defined in Section 644(g), FAA 
as "the quantity of defense articles owned by the United States 
Government J and not procured in anticipation of military assistance 
or sales orders, which is in excess of the Approved Force Acquisition 
Objective and Approved Force Retention Stock of all Department 
of Defense Components at the time such articles are dropped from 
inventory by the supplying agency for delivery to countries or 
international organizations under this Act." The Approved Force 
Acquisition Objective and the Approved Force Retention Stock levels 
are the quantities of items authorized to be acquired and retained 
to meet U.S. peacetime operational and mobilization reserve require- 
ments of approved force levels. 

For many years, the total monetary value (acquisition cost) 
of the excess defense articles program accounted for the second 
largest dollar value of any weapons transfer program. The total 



34 



acqusition cost of equipment furnished under this program ranged 
from $647 million in FY 1960 to $419 million in FY 1973. The 
"value" of these articles to be charged to MAP appropriations was 
merely the "gross cost incurred by the United States Government 
in repairing, rehabilitating, or modifying such articles." The 
total acquisition cost of the article was thus written off. Thus, 
excess defense articles were utilized as a supplement to Military 
Assistance Program (MAP) appropriations. 

In 1970, Congress became particularly concerned about this 
use of excess defense articles by the Department of Defense as a 
means of augmenting military assistance appropriations. In that 
year, Congress refused to authorize an additional $54.5 million 
in MAP funds to provide a squadron of F-4 aircraft to the Republic 
of China. Following this refusal, the Department of Defense announced 
it was providing the Republic of China with a number of F-lOO 
and F-104 aircraft from excess stocks. Amendments to the Foreign 
Military Sales Act [P.L. 91-672, January 12, 1971], therefore, required: 
(1) the value of excess defense articles granted to a foreign country 
or international organization shall be considered to be an expenditure 
of funds appropriated for military assistance (Section 8(a)); (2) the 
value of any defense article so transferred will not be less than one- 
third of the acquisition cost to the United States (Section 8(c)). These 
provisions applied, however, only to the excess defense articles ordered 
during any fiscal year in excess of $100 million. 



35 



These two congressional limitations made the transfer of excess 
defense articles far less attractive and had the effect of reducing 
the program. For FY 1975, the acquisition cost of excess defense 
articles delivered under MAP to foreign nations or international 
organizations was $99.7 million and in FY 1976 was $37.2 million. 
Some of this reduction, of course, could also be attributed to lessened 
availability of excess defense articles after the Vietnam War. 

The International Security Assistance and Arms Export Control 
Act of 1976, however, repealed the major provisions of P.L. 91-672 
relating to excess defense articles and substituted new provisions. 
Henceforth, Section 31(d), AECA, provided that the aggregate acquisi- 
tion cost to the United States of excess defense articles provided 
under the Military Assistance Program (MAP) or through sales in 
any fiscal year subsequent to Fiscal Year 1976 may not exceed $100 
million (exclusive of ships). 

J. REQUIRED REPORTS 

Section 657, FAA, requires an annual report to the Congress 
from the President showing the aggregate dollar value of all foreign 
assistance provided by the United States Government by any means 
to all foreign countries and international organizations by category 
to each such country and organization. In addition, an annual report. 



36 



for the next five years, to the Congress is required which reviews 
progress of the force modernization program of the Republic of Korea, 
the role of the U.S. in mutual security efforts in the Republic of 
Korea, and the prospects for, or implementation of, phased reduction 
of U.S. Armed Forces in the Republic of Korea, in coordination with 
the Korean time table for military self-sufficiency (Section 668). 

Section 653(a), FAA, requires the President to report to 
the Congress no later than thirty days after the enactment of any 
law appropriating funds for security assistance programs as to each 
foreign country or international organization to which the government 
plans to provide funds under such law and the amounts of funds, by 
category of assistance, that will be provided. 

In addition, Section 643(d), FAA, requires the President to 
report to the Congress at the end of each fiscal year actions which 
resulted in the furnishing of assistance of a kind or purpose, or 
to an area substantially different from that included in the presenta- 
tion to Congress, or which resulted in obligations greater by fifty 
per cent than that which was proposed, and the justification therefore. 
This section also specifies that, in presentation material to the Congress 
justifying security assistance requests, a comparison of proposed programs 
with those of the previous year will be included, with an explanation 
of substantial changes. This presentation material will also include 



37 



a chart showing, insofar as security assistance is concerned, the full 
extent of all United states assistance planned or expected on a country- 
by-country basis for the next fiscal year. 

Section 8(d), P.L. 91-672, requires that the President promptly 
report to the Congress any decision to furnish on a grant basis to any 
country excess defense articles which are major weapons systems to the 
extent that these systems were not included in presentation material 
previously submitted to the Congress. Additionally, this Section 
requires a quarterly report to the Congress listing by country the total 
value of all deliveries of excess defense articles, giving both the 
original acquisition cost and the aggregate value at time of delivery. 

K. ADMINISTRATION OF THE PROGRAM 

The Secretary of State, under the direction of the President, 
is charged with the responsibility for the general direction and 
continuous supervision of grant military assistance and training 
programs. His responsibilities, as set forth in Section 622(c), 
FAA, include determining whether there should be a military assistance 
or training program for a country and the value thereof, so that such 
programs are effectively integrated both at home and abroad with other 
assistance programs and the foreign policy of the United States is best 
served thereby. 



38 



In addition, any decision to furnish military assistance shall 
be coordinated with the Director, Arms Control and Disarmament 
Agency (ACDA) and shall take into account his opinion as to whether 
such assistance will: (a) contribute to an arms race; (b) increase 
the possibility of outbreak or escalation of a conflict; and (c) 
prejudice the development of bilateral or multilateral arms control 
arrangements (Section 511). 

The responsibilities of the Secretary of Defense concerning 
the military assistance and training programs, as set out in Section 
623, FAA, include: (a) the determination of military end-item 
requirements; (b) the procurement of military equipment in a manner 
which permits integration with service programs; (c) the supervision 
of foreign military training; (e) the movement and delivery of end- 
items; and (f) the establishment of priorities in the procurement, 
delivery, and allocation of military equipment. 

Within the Department of Defense, the Assistant Secretary 
of Defense/International Security Affairs (ASD/ISA) acts for the 
Secretary of Defense and is his principal representative and spokes- 
man on security assistance matters. As the operating arm of 
the Secretary of Defense, the Defense Security Assistance Agency (DSAA) 
is responsible for directing and supervising the implementation and 
administration of the program. The Military Departments are specifically 



39 



responsible for conducting training and for procuring and providing 
such defense articles and services as may be required by approved 
security assistance programs. 

The Defense Security Assistance Council (DSAC) advises the 
Secretary of Defense on security assistance matters of major impor- 
tance and provides expeditious high-level coordination of such matters 
within DOD. Membership of the DSAC includes the ASD/ISA (Chairman), 
the Director, DSAA (Secretary), appropriate Assistant Secretaries 
of Defense, and the Director of the Joint Staff, JCS. The Chairman 
may also request representation from the military services on an ad 
hoc basis as appropriate. 

L. SECURITY ASSISTANCE PLANNING 

Planning for security assistance is an integral part of the Depart- 
ment of Defense Planning, Programming, and Budgeting System (PPBS). 
Security assistance programs are initiated by requests from recipient 
governments. U.S. overseas security assistance management organizations 
(MAAGS, etc.) provide their estimates of host country plans and require- 
ments to the Unified Commands. Commanders of Unified Commands review and 
comment on these security assistance plans and programs, correlate 
them with U.S. military plans, and are responsible for developing 
and submitting assistance plans to the Secretary of Defense. The 
Joint Chiefs of Staff (JCS) are responsible for correlating security 
assistance planning with military force planning and security objectives 
and provide the Secretary of Defense with their recommendations 



40 



concering security assistance levels. Upon approval by the Secretary of 
Defense, these reconnnendations are considered by the Security Assistance 
Program Review Committee (SAPRC), an interagency working group of the 
newly-established Arms Export Control Board (AECB)(see pp. 74-78). The 
SAPRC, chaired by the Director of the Bureau of Political-Military 
Affairs, Department of State, reviews country assistance plans and 
makes recommendations to the AECB on resource allocations and proposed 
budgetary levels for the security assistance program. The decisions 
of the AECB, after approval by the appropriate departments, are included 
in budget proposals, reviewed by the Office of Management and Budget 
(0MB), and, based upon Presidential decision, are included in the 
budget presented to the Congress. 

M. CURRENT STATUS 



Military aid has been a decreasing part of the total U.S. arms 
transfer program. Military aid appropriations have ranged from a high 
of $5.7 billion in FY 1952 to a low of $220 million in FY 1978.* 

The list of restrictions on the use of grant military assistance 
attests to congressional interest in the oversight of this program 
in terms of policy, impact, extent, and purpose. This interest has 
been expressed through annual hearings and through congressional 
authorization of programs and amounts, and appropriation of funds. 



Not including MASF. See note, p. 9. 



41 



Grant military assistance programs of the United States were 
born in the early days of the cold war and the stated purpose of 
these programs since their inception has been to strengthen the mutual 
defense and collective security of the non-Communist world. As such, 
these programs were flexible instruments of U.S. foreign policy. 
However, as these programs — and U.S. relations with the rest of 
the world — evolved, these programs began to be justified on several 
new grounds. For example, grant military assistance programs have 
been requested for the following purposes: to retain U.S. military 
base rights; to maintain regional arms balances and thus contribute 
to regional stability in areas important to the U.S.; to encourage 
greater military self-reliance on the part of certain nations; to 
promote favorable bilateral relations; to establish and maintain 
rapport with the military leaders of foreign countries in order to 
provide channels of communications, dialogue, and influence which 
are valuable to the U.S. Government for diplomatic and commercial, 
as well as military, reasons; to provide tangible evidence of U.S. 
support; to maintain internal security and contribute to self-defense 
capabilities; to preclude arms aid and sales by other nations; to 
insure the survival and security of nations to whom the U.S. committed; 
to contribute to the stability of friendly regimes; to contribute to internal 
development by assisting the military forces in less developed friendly 
countries to construct public works and engage in other activities helpful 
to their economic and social development. 



42 



Clearly, the Congress has indicated that this program should, 
in general, be phased out and be replaced by a program of credit and 
cash sales, to the extent possible. Legislative authority for the 
Military Assistance Program, however, remains intact. This program 
is likely to continue on an annually authorized basis for specific 
countries for some years to come in order to provide payments to countries 
with which the United States has concluded agreements for base rights 
in exchange for, inter alia, multi-year military assistance commitments. 
The program also remains available for unforseen contingency use or 
in situations where a "sales" approach may be inappropriate for 
economic or foreign policy reasons. 



III. INTERNATIONAL MILITARY EDUCATION AND TRAINING (IMET) 

A. DEFINITION 

The International Security Assistance and Arms Export Control 
Act of 1976 [PL 94-329] established a separate chapter for inter- 
national military education and training in the Foreign Assistance 
Act (Part II, Chapter 5). Previously grant training assistance 
had been included under military assistance totals. Since inception 
of the program under MAP, about 456,000 foreign personnel have been 
trained. Military education and training is defined as "formal or 
informal instruction of foreign students in the United States or 
overseas by officers or employees of the United States, contract 
technicians, contractors, or by correspondence courses, publications 
and media of all kinds, training aids, orientation, and military 
advice to foreign military units and forces" (Section 644, FAA) . 

B. PURPOSES 

The purposes of such training, as indicated in the Act, are 
to encourage mutually beneficial relations and increased under- 
standing between the United States and foreign countries as well 
as to improve the ability of participating countries to utilize 
their resources-including defense resources obtained from the 
United States — with maximum effectiveness (Section 543). Such 
training and education may be provided to military and "related 
civilian personnel" of foreign countries through attendance at 

(43) 



44 



military educational and training facilities (other than Service 
academies) in the United States and abroad; attendance in special 
courses at schools in the United States and abroad; and observa- 
tion and orientation visits to military activities and related 
activities in the United States and abroad (Section 541). After 
June 30, 1976, however, no training may be conducted outside the 
United States unless the President has reported and justified such 
training to the Congress (section 542). 

C. LIMITATIONS 



International Military Education and Training (IMET) is 
considered "assistance under the Foreign Assistance Act of 1961" 
and, as such, is subject to all legal restrictions on such assistance, 
but IMET is not subject to legal restrictions on "military assistance" 
expressed in those terms. 

The Congress, in addition, has expressly prohibited the 
furnishing of IMET to Ethiopia, Uruguay, Chile, and to Argentina 
after September 30, 1978. Also not more than $700,000 may be 
furnished the Philippines for international military education 
and training in FY 1978. No IMET funds may be furnished Uganda, 
Cambodia, Laos, Mozambique, Angola, Cuba, or the Socialist Republic 
of Vietnam (see pp. 20-24). 



45 



p. CURRENT STATUS 

The Department of Defense feels that the training of foreign 
military personnel is of lasting value and provides a simple, direct, 
effective, and relatively inexpensive contribution to the achieve- 
ment of American foreign policy objectives. Participation in the 
program, it is hoped, will often create ties to the United States 
that endure long after the actual training experience is completed. 
Alumni of the program include many individuals who have become high 
ranking military and government leaders in their countries today. 
Since instruction is largely conducted in English, this tends to 
become the foreign student's second language, producing a bonus 
which transcends the immediate purposes of the instruction. 

In an analysis of the U.S. foreign military training program 

conducted in 1976, Dr. Ernest W. Lefever concluded: 

The Military Assistance Training Program has been 
and is a low-cost, low-risk foreign policy instrument 
that has served the United States interest in interstate 
stability and has provided a valuable channel of communica- 
tion and influence with a significant elite, especially 
in the Third World. ... The program has advanced the 
efficiency, professional performance, and readiness of 
the recipient military services. Perhaps more significant, 
it has established a continuing link between United States 
and host-state military leaders, many of the latter being 
in positions of political responsibility. 1/ 



1/ Ernest W. Lefever, "The Military Assistance Training 
Program," The Annals of the American Academy of Political and 
Social Science, March 1976. 



IV. FOREIGN MILITARY SALES (FMS) 

A. DEFINITION 

The F oreign Military Sales (FMS) program is carried out under 
the provisions of the Arms Export Control Act (AECA) , formerly the 
Foreign Military Sales Act (FMSA).* That Act provides for transfer 
of arms, other military equipment, and various services through govern- 
ment-to-government agreements. Under this program, the Department 
of Defense purchases military equipment or services from United 
States firms, or takes equipment to be sold from U.S. stocks (under 
some circumstances) and sells the equipment or services to a foreign 
government, or sells the services of DOD personnel such as training 
or management advice. This program is not considered "assistance" 
as such since there is no cost to the U.S. Government. However, 
these sales comprise the largest volume of U.S. arms transfers. 

B. ELIGIBILITY 



In order for a country or international organization to be 
eligible to purchase arms or defense services from the United States 
under the AECA, the President must find that the furnishing of such 
articles and services, in language exactly the same as required to 
justify the MAP under the Foreign Assistance Act (FAA), "will 



* The title of the act was changed by Section 201 of the 
International Security Assistance and Arms Export Control Act of 
1976, and reflects increased congressional interest in the control 
of arms sales. 

(46) 



47 



strengthen the security of the United States and promote world 
peace" (Section 3(a)(1)). As in the FAA, the country must agree 
that it will not, without Presidential consent, transfer title 
or possession to another country or use the articles for purposes 
other than those for which furnished under U.S. legislation. 

In addition, cash sales are to be approved only when con- 
sistent with U.S. foreign policy and national security interests 
and foreign aid purposes, with regard being given to the economic 
and financial capability of the purchaser and the impact of the 
sale on the purchasers social and economic development and on existing 
and incipient arms races (Section 1, AECA) . 

C. PURPOSES FOR WHICH SALES ARE PERMITTED 



Purposes for which defense articles and services are permitted 
to be sold are listed in section 4, AECA, and are identical to the 
purposes contained in Section 502, FAA (see page 14). Similarily, 
the penalty for substantial misuse of these articles is that the 
recipient country shall be immediately ineligible for further 
cash sales, credits, guaranties, or deliveries pursuant to previous 
sales. A country can be determined to be ineligible either by 
a Presidential determination transmitted in writing to the Congress 
or by a joint resolution of the Congress. Cash sales and deliveries 
pursuant to previous sales may continue to be made, however, if 



48 



the President certifies in writing to the Congress that such termina- 
tion would have "significant adverse impact on United States security.' 
Termination of cash sales and deliveries would remain in effect, how- 
ever, even in the face of such Presidential determination, if Congress 
has adopted a joint resolution to that effect (Section (3(c)). 
A country found ineligible under the above provisions and 
procedures would remain ineligible until the President determined 
the violation had ceased or the country concerned had given satis- 
factory assurances that such violations would not recur. 

D. SALES FINANCING PROGRAM 



The Arms Export Control Act (AECA) provides authority for 
the President to finance procurement of defense articles and ser- 
vices or to guarantee financing for friendly foreign countries or 
international organizations (Section 23). A major purpose of 
AECA credit is to help economically less developed countries make 
the transition from grant aid to sales. 

Three basic types of credit assistance utilizing U.S. Govern- 
ment resources are generally available for military sales: 

1. POD Guaranteed Credit: 

The AECA (Section 24) provides that the President may "guarantee 
any individual, corporation, partnership, or other juridical entity 
doing business in the U.S. (excluding U.S. Government agencies other 



49 



than the Federal Financing Bank), against political and credit 
risks of nonpayment arising out of their financing of credit sales 
of defense articles and services to friendly countries and inter- 
national organizations." 

To cover possible nonpayment to U.S. lenders, the AECA requires 
that ten percent (10%) of the principal amount of all guaranteed 
loans to be aside as a reserve, using funds appropriated for that 
purpose. A fee of one-fourth of 1% is charged for such guarantees. 

Since Section 24(a), AECA, was amended in 1974 to permit such 
financing, the Federal Financing Bank (FFB) has been the exclusive 
source of DOD guaranteed financing. 

2. POD Direct Credit: 

In this case, the Defense Department directly finances 
procurement of defense articles for sales credit out of funds 
specifically appropriated for AECA financing programs. Although 
there is no legal prohibition against using FMS funds for credit 
to develped countries, U.S. Government policy and practice have 
generally restricted such credit to eligible economically less 
developed countries. The basic reason for this policy is to 
maximize available AECA credit resources which are generally more 
limited than other credit resources. FFB financing with DOD 
guaranties is preferred to DOD direct credit because the former 
requires only 10% of the principal amount to be obligated whereas 



50 



the latter requires 100%. DOD direct credit is used largely, if 
not exclusively, at the present time to satisfy that portion of 
credits provided to Israel which by law are not required to be re- 
paid to the United States and which cannot therefore be met by use 
of the FFB. 

Repayment to the U.S. Government of these credits must be 
completed within twelve years after delivery (Section 23). How- 
ever, DOD credit arrangements require completion of principal 
repayment within a stated number of years after the initial 
disbursement of funds, which generally precedes delivery of the 
procured items to the borrower-purchaser. 

Interest on credits is set by the AECA (Section 23) at "a 
rate equivalent to the current average interest rate, as of the 
last day of the month preceding the financing of such procurement, 
that the United States Government pays on outstanding marketable 
obligations of comparable maturity, unless the President certifies 
to Congress that the national interest requires a lesser rate of 
interest" and states the justification therefor. 

Funds for DOD direct and guaranteed credits are authorized 
and appropriated annually by Congress, and when repaid are returned 
to the general account of the Treasury. Thus, one of the major 
congressional controls on credit sales, a control which does not 
apply to those commercial and government sales not financed under 



51 



the AECA, is this annual ceiling imposed by the authorization and 
appropriation of specific amounts for financing those sales. For 
FY 1978, $675.85 million was appropriated to support a credit sales 
program of $2,102.35 million. 

3. Export-Import Bank Direct Credit 

Export-Import Bank direct credit may be utilized for sales 
of defense items only to developed countries. The AECA (Section 
32) specifically prohibits the Export-Import Bank from using its 
credit resources for the sale of defense items to economically 
less developed countries However, the Export-Import Bank has not 
in recent years financed any military sales even to developed 
countries . 

E. PROCUF^MENT AND PRICING 



Section 22 of the AECA authorizes the President to procure 
defense articles or defense services for sale without requirement 
for charge to any appropriation or authorization if a "dependable 
undertaking" has been provided by a foreign country or international 
organization to pay the full amount of such contract which will assure 
the United States Government against any loss on the contract. 
In FY 1975, the procurement by the U.S. Army for foreign military 
sales exceeded procurement for its own use. 

A Foreign Military Sales Trust Fund maintained by the Security 
Assistance Accounting Center, Denver, Colorado, functions as a holding 



23-874 O - 78 - 5 



52 



account and medium of transfer for payments received from foreign 
governments for defense articles procured by the U.S. military 
departments on their behalf, or for items sold out of stock. The 
trust funds of all military services are maintained in this one 
account. Sales agreements which are executed with a foreign govern- 
ment provide authority to the military department to enter into a 
contract with a supplier and thereby incur an obligation. These 
obligations are liquidated by funds which the foreign governments 
have paid into the trust fund. 

The AECA also mandates pricing policies for the sale of 
U.S. defense agencies and equipment. In the case of defense 
articles not intended to be replaced in the U.S. inventory, the 
actual value of the item must be charged. If it is intended to 
replace the item in the U.S. inventory, then the estimated cost 
of replacement, minus any depreciation, will be charged (Section 2(a)) 
"Value" in regard to excess defense articles is further defined 
in Section 47(2), AECA, as not less than the greater of: (1) the 
gross cost incurred by the United States Government in repairing, 
rehabilitating, or modifying such article, plus the scrap value; 
or (2) market value, if ascertainable. 

For defense services, the full cost to the U.S. Government 
of furnishing such service will be charged (Section 21(a)). 



53 



Appropriate changes shall also be included for administrative ser- 
vices; any use of plant and production equipment in connection with 
the purchased articles; and a proportionate amount of any non- 
recurring costs of research, development, and production on major 
defene equipment sales under the AECA. The President, however, 
may reduce or waive the charge or charges concerning use of plant 
and equipment and/or non-recurring costs for particular sales 
that would significantly advance North Atlantic Treaty Organization 
(NATO) standardization efforts, or foreign procurement in the United 
States under co-production arrangements (Section 21(e)). In addi- 
tion, other administrative expenses incurred by U.S. Government 
personnel in carrying out sales functions which are primarily for 
the benefit of any foreign country will be fully reimbursed from 
amounts received from sales (Section 43(b). 

Sales will be made only for U.S. dollars. Payment shall be 
made in advance, or, if the President determines it to be in the 
national interest, upon delivery of the defense article from stock 
or the rendering of the defense service. Interest will be charged 
on any amount not paid within sixty days. The President may 
extend this to one hundred twenty days if he determines that 
emergency requirements of the purchaser for acquisition of the 
defense articles or services exceeds the ready availability to 



54 



the purchaser of funds to pay for them in full within the sixty 
day period, notifies Congress of that determination, and makes 
a special emergency request for authorization and appropriation 
of additional funds to finance such purchases (Sections 21 and 
22). 

Section 663(a), FAA, authorizes the President, "notwith- 
standing and other provision of law," to furnish defense articles 
or services under the AECA in exchange for "any necessary or 
strategic raw material," when he determines this to be in the 
U.S. national interest. These materials include petroleum, other 
fossil fuels, metals, minerals, or any other natural substance 
which the President determines is in short supply in the United 
States. Section 663(c), however, requires that funds received 
for the disposal of such materials must be deposited as miscellaneous 
receipts in the U.S. Treasury. This, in effect, would require 
payment for defense articles or services furnished under this 
program to be financed by Department of Defense appropriations. 

F. AGENT'S FEES 



Section 39, AECA, requires the Secretary of State, under 
such regulations as he may prescribe, to receive "adequate and 
timely' reports on political contributions, gifts, commissions 
and fees paid or offered or agreed to be paid by any person in 



55 



connection with sales of defense articles or services to or for 
the armed services of a foreign country or international organiza- 
tion to secure the conclusion of such sales. The amounts and kinds 
of payments or offers and the names of sales agents or other personi 
receiving such payments shall be specified. The President may 
prescribe regulations to prohibit, limit, or prescribe conditions 
with respect to such payments. No such payment may be included 
in the FMS procurement price of defense articles and services 
unless the amount is reasonable, allocable to such procurement, 
and not made to a person who has solicited, promoted or other- 
wise secured the sale, or held himself out as able to do so, 
through improper influence. A quarterly report to the Congress 
describing each such contribution, payment, gift, commission, 
or fee is required by Section 36(a)(8), AECA. 

G. TRANSFERS TO THIRD COUNTRIES 



Requirements for Presidential and Congressional approval 
for the transfer of U. S. -furnished defense articles and services 
to a third country under the FMS program are exactly the same as 
for articles furnished under MAP (see pp. 16-17). 

H. LEGISLATIVE RESTRICTIONS 



In addition to the requirements heretofore discussed, the 
Congress has enacted the following specific restrictions on foreign 



56 



military sales under the Arms Export Control Act (AECA) (all 
references are to that Act unless otherwise specified): 

a. Sales shall not be approved to arm military 
dictators who are denying the growth of funda- 
mental rights or social progress to their people. 
The President may waive this sense-of-Congress 
limitation when he determines it would be important 
to the security of the United States and so reports 
to Congress (Section 1). 

b. No sales shall be made, or credits or guaranties 
provided to any country whose laws, regulations, 
official policies, or governmental practices prevent 
any United States person from participating in 

the furnishing of defense articles and services 
on the basis of race, religion, national, origin, 
or sex (Section 5) . 

c. Unless the President determines that national security 
requires otherwise and so reports to the Congress, 

he shall terminate all sales, credits, or guaranties 
for one year to any government which aids or abets, 
by giving sanctuary from prosecution to any individual 
or group which has committed an act of international 
terrorism (Section 3 (f)). 

d. Sales of defense articles or services which would 
have significant adverse effect on the combat readi- 
ness of United States Armed Forces will be kept to 
an absolute minimum, and the President must certify 
to the Congress that each such sale is important to 
the security of the United States (Section 21(h)). 

e. No sale or credit guarantee shall be made to an 
economically less developed country that is diverting 
development assistance or P.L. 480 sales furnished 

by the United States to military expenditures, or 
diverting its own resources to unnecessary military 
expenditures to a degree which materially interferes 
with its development, until the President is assured 
that such diversion shall no longer take place (Section 
35 (a)). 



57 



f. FMS funds may be used for procurement outside the 

U.S. only if the President determines that such procure- 
ment will not result in adverse effects upon the U.S. 
economy or the industrial mobilization base which 
outweigh other advantages to the U.S. (Sec. 42(c)). 

g. No credits shall be extended or guaranteed for any 
sale of sophisticated weapons systems, such as 
missile systems and military jet aircraft, to any 
underdeveloped country (other than Greece, Turkey, 
Iran, Israel, the Republic of China, the Philippines, 
and Korea), unless the President determines that 
such financing is important to the national security 
of the United States and reports each such determina- 
tion to the Congress (Section 4). 

h. No credit or guarantee shall be provided in any 

case involving coproduction or licensed production 
outside the United States or any defense article of 
U.S. origin unless the Secretary of State shall, in 
advance of such transaction, furnish the Congress with 
full information regarding the proposed transaction 
to include a description of the article(s) to be 
produced, their estimated value, and the probable 
impact of the proposed transaction on employment 
and production within the United States (Section 
42(b)). 

i. No funds shall be used to provide foreign military 
credit sales to Argentina, Brazil, El Salvador, and 
Guatemala (Section 503B, Foreign Assistance Appropria- 
tions Act, 1978). 

j. No credit or cash sales may be made to Chile, and 
no cash sales may be made to Argentina after 
September 30, 1978 (see pp. 19-23). 

k. No credits may be provided Cuba, Ethiopia, Uganda, 
Cambodia, Laos, the Socialist Republic of Vietnam, 
Mozambique, or Angola (see pp. 19-23). 

1. In Fiscal Year 1978, not more than $1.85 shall be 

used for foreign military credit sales to the Govern- 
ment of the Philippines. Cash and credit sales to 
Turkey shall be limited to $175 million in Fiscal 
Year 1978 (see pp. 19-23). 



58 



Finally, the AECA provides that any cash sale entered into 
may be canceled in whole or in part, or its execution suspended 
by the United States at any time under or compelling circumstances 
if the national interest so requires (Section 42(e)(1)). 

There is no specific legislative ceiling on arms sales under 
the FMS program. The question of such a ceiling, to include commercial 
sales, was addressed by the 94th Congress, and a ceiling on sales 
was included in the initial Security Assistance Authorization Bill 
passed in 1976. This bill, however, was vetoed by President Ford 
on May 7, 1976. A subsequent bill which contained no ceiling was passed 
and signed by the President. This act, (P.L. 94-329) however, con- 
tained a sense-of-the Congress provision to the effect that the 
aggregate value of FMS and commercial sales in any fiscal year 
"should not exceed current levels'' (Section 1, AECA). 

I. RESTRICTIONS ON THE USE OF U.S. MILITARY PERSONNEL 



Congress has provided for some flexibility in the utilization 
of U.S. military personnel in the FMS program. The requirement 
for specific Congressional authorization for U.S. military missions 
on a country-by-country basis, as well as numerical restrictions on 
those missions contained in Section 515, Foreign Assistance Act 
(see pp. 26-28) do not apply to U.S. Armed Forces members performing 
services for specific purposes and for specific periods of time on 
a fully reimbursable basis in connection with FMS activities (Section 
515(g), FAA). 



59 



The Arras Export Control Act (AECA) does, however, place some 
additional restrictions on the use of U.S. military personnel in 
the conduct of the program. Section 21(c) of the AECA states that 
^'personnel performing defense services sold under this Act may not 
perform any duties of a combatant nature, including any duties 
related to training, advising, or otherwise providing assistance 
regarding combat activities, outside the United States in connec- 
tion with the performance of these defense services." In addition, 
Section 42(f), AECA, states that, to the maximum extent possible, 
civilian contract personnel will be used in foreign countries to 
perform defense services sold under the Act. 

The entire costs (including salaries of U.S. military personnel) 
of overseas management of the FMS program must be reimbursed 
from charges for administrative services collected on FMS cases 
(Section 515(g), FAA and Section 43(b), AECA). 

J. CONGRESSIONAL CONTROL 

The major provision of law which provides Congress with approval 
or disapproval authority over specific sales under the FMS program, 
other than the specific restrictions indicated above, is contained 
in Section 36(b), AECA. This section requires that any letter of 
offer to sell defense articles or services in the amount of $25 
million or more or any major defense equipment* in the amount of 



* Major defense equipment is defined as any item of significant 
combat equipment on the U.S. Munitions List having a nonrecurring 
research and development cost of more than $50 million or a total 
production cost of more than $200 million. 



60 



$7 million or more shall be submitted to the Congress prior to being 
issued, and shall not be issued if the Congress, within thirty (30) 
calendar days after receiving such statement, adopts a concurrent 
resolution stating that it objects to the proposed sale. This 
provision is waived, however, if the President certifies at the 
time the notification of the proposed sale is submitted to the 
Congress that an emergency exists which requires the sale in the 
national security interests of the United States. 

In order to allow the Congress additional time to review 
proposed arms sales, the Defense Security Assistance Agency (DSAA) 
has agreed to provide the Congress with 20 days advance notifica- 
tion prior to the formal notification required by Section 36(b). 

At least one hundred fifteen (115) resolutions to disapprove 
sales have been introduced since the enactment of this authority. 
Although hearings have been held in both Houses of Congress on 
many of those resolutions, no sales have been disapproved by Congress 
to date. However, informal consultations between the Congress 
and the Administration have resulted in modifications to Administration 
proposals in the case of the sale of HAWK surface-to-air missiles 
to Jordan and of SIDEWINDER air-to-air missiles and MAVERICK air-to- 
ground missiles to Saudi Arabia. Congress has also raised questions 
concerning the sale of airborne warning and control system (AWACS) 
aircraft to NATO and Iran and C-130 aircraft to Egypt. 



61 



K. ADMINISTRATION OF THE PRO GRAM 

Functions and responsibilities of the Executive Departments 
in the FMS program, as spelled out in the AECA, are very similar 
to those enacted in the FAA. The Secretary of State, under the 
direction of the President, is charged with responsibility for the 
continuous supervision and general direction of sales and exports, 
including the determination as to whether there shall be a sale 
to a country and the amount thereof, "to the end that sales and 
exports are integrated with other United States activities and the 
foreign policy of the United States is best served thereby" (Section 
2(b)). 

The establishment of priorities in the procurement, delivery, 
and allocation of military equipment under this program is determined 
by the Secretary of Defense, under the direction of the President 
(Section 42(d)(2)). In addition, the Secretary of Defense has 
primary responsibility for: (a) the determination of military end- 
item requirements; (b) the procurement of military equipment in 
a manner which permits its integration with service programs; (c) 
the movement and delivery of military end-items; and (d) the super- 
vision of the training of foreign military personnel under this 
program (Section 42(d)(1)). 

In evaluating any proposed sale, the opinion of the Director 
of the United States Arms Control and Disarmament Agency (ACDA) 



62 



as to the extent to which such sale might contribute to an arms 
race, or increase the possibility of outbreak of escalation of 
conflict, or prejudice the development of bilateral and multilateral 
airms control arrangements, will be taken into account (Section 42 
(a)(3)). 

Within the Department of Defense, the Assistant Secretary of 
Defense, International Security Affairs (ASD/ISA) has been appointed 
to act for the Secretary of Defense in security assistance and arms 
sales matters. The Director, Defense Security Assistance Agency 
(DSAA) is responsible for directing, administering, and supervising 
security assistance programs. The Director, DSAA is a military 
officer of at least three-star rank while serving in that position, 
who concurrently serves as Deputy Assistant Secretary of Defense 
for Security Assistance. Among his duties and responsibilities 
are the following: 

1. Direct, administer, and supervise, within the policies 

established by the Assistant Secretary of Defense (Inter- 
national Security Affairs), approved security assistance 
plans and programs. The administration of sales programs 
may be delegated in whole or in part to the Military 
Departments, but such administration will be under the 
direction and supervision of the DSAA. 



63 



2. Direct and supervise implementation of security assistance 
programs to include daily line item management of security 
assistance materiel and training programs to include excess 
and long supply items. 

3. Conduct international logistics and sales negotiations with 
foreign countries, as directed by the Assistant Secretary 
of Defense (International Security Affairs) and in coordina- 
tion with the offices within the Office of the Secretary 

of Defense which are responsible for logistics policies. 

4. Maintain liaison with U.S. industry in the export of 
military supplies, equipment, and services. 

5. Manage governmental and government supported private 
sources of credit financing of foreign military sales. 

6. Develop, within policy guidance, and promulgate security 
assistance procedures. 

L. PROCESSING REQUESTS FOR ARMS PURCHASES 

Requests for the sale of defense articles or services originate 
with the foreign country concerned. The Department of State has 
categorized countries eligible for military sales as Category A 
(generally NATO or other developed countries) or Category B. Some 
countries are listed as Category A for maintenance support and as 
Category B for major military end items. Category A countries are 



64 



authorized to send their requests for arms purchases directly to 
the U.S. Military Departments (Army, Navy, Air Force) for action 
without prior State Department review or approval. The Department 
of State does, however, review and approve sales which require the 
notifications to Congress required by Section 36(b), AECA (see 
pp. 59-60) for defense articles and services of $25 million or more 
for any purchaser. 

In addition, any sale for which a sales commission or fee 
is included must be coordinated with the Defense Security Assistance 
Agency (DSAA), regardless of the dollar amount or the country 
involved. When ready for submission to the purchasers, all letters 
of offer are submitted by the Military Departments to the Defense 
Security Assistance Agency (DSAA) for final approval and counter- 
signature. DSAA clears all such letters of offer to to the State 
Department's Bureau of Politico-Military Affairs prior to submission 
to the purchaser (Chart 1). 

Category B countries require submission to, and approval by, 
the Department of State and the Department of Defense prior to action 
within the Military Departments. All requests for credit sales 
must be submitted to the Department of State for approval. 

When procurring for a foreign government, the Department 
of Defense applies the same contract clauses and contract administra- 
tion as it would use in procuring for itself, except where exceptions 
are authorized in Armed Forces Procurement Regulations. When a 



65 



CHART 1 



PROCESSING EXPORTS OF U.S. MUNITIONS UST ARTICLES 

U.S. GOVERNMENT SALE TO FOREIGN GOVERNMENT PURCHASER 



FOREIGN GOVERNMENT 

MILITARY, PAR* MIIITARY. 

OR SPACE AGENCY PURCHASER 

FROM USG SOURCE 



I tOENCT Of 




PM/MC 

VERIFIES 

US. GOVERNMENT 

SALES 

TRANSACTIONS 



fMS CASES. OTHFI US COVttNMCIIT 
AOtKCT S»K 

i iifotifo IT 

OOVilNMfNT 
NSE IS liOUIIED 



FOREIGN COUNTRY 
GOVT 
AGENCIES 



lEGCND 
— iouinun riow 



Source; 



Office of Munitions Control 
(Modified by the author). 



Department of State 



66 



foreign government requests, prior to its acceptance of the letter 
of offer, that a particular prime contractor of subcontractor be 
used in the execution of the sale, the request will be honored when 
the sole source designated is based upon the objective needs of 
the FMS purchaser as stated by the purchaser, but will not be honored 
in any case of patently arbitrary, capricious, of discriminatory 
exclusion of other sources. 

M. REPORTING REQUIREMENTS 

The International Security Assistance and Arms Export Control 
Act of 1976 also amended the Foreign Assistance Act and the Arms 
Export Control Act so as to impose additional reporting requirements 
on the Administration in order for the Congress to be better informed 
concerning the security assistance program. Section 657, FAA, requires 
that, not later than March 31 of each year, the President shall 
report to the Congress the following data for the preceeding fiscal 
year: (1) the aggregate dollar value by category of all foreign 
assistance (including international military education and training), 
foreign military sales, sales credits, and guaranties provided or 
made by the United States Government by any means to all foreign 
countries or international organizations by each country and organiza- 
tion; (2) the total amounts of foreign currency paid by each foreign 
government or international organization to the United States Government 



67 



in each fiscal year, what the payment was for, whether any portion 
was returned by the U.S. Government to the country concerned or to 
another country of organization, and, if so, the kind of assistance 
obtained by that country with those foreign currencies; and (3) the 
aggregate dollar value and quantity of defense articles and services, 
and of military education and training, exported to each foreign 
country or organization by category. 

Section 25, AECA, (added in 1976) requires the President to 
transmit to the Congress, as part of the presentation materials for 
proposed security assistance programs for each fiscal year, a report 
which sets forth: (1) an estimate of the amount of cash sales expected 
to be made to each specific country, including a detailed state- 
ment of the foreign policy and national security considerations 
involved in such expected sales; (2) an estimate of the amounts 
of credits and guaranties expected to be extended to each country; 
(3) a list of all Presidential findings that the furnishing of 
defense articles and services to specific countries will strengthen 
the security of the United States and promote world peace (as 
required by Section 3(a)(1), AECA), together with full justifica- 
tion for each such finding; and (4) an arms control impact state- 
ment for each purchasing country, including an analysis of the 
relationship of expected sales and arms control efforts relating 
to each country and the impact of such sales on the stability of 
the region of the purchasing country. It should be noted, however. 



68 



that these estimates of expected cash sales are not binding upon 

the Administration. However, these estimates of sales credits to 

be extended by country may not be exceeded by the Administration unless 

the Appropriations Committees are "previously notified fifteen days 

in advance" (Foreign Assistance Appropriations Act, 1978, Title 

I, Economic Assistance, last unnumbered paragraph). 

Section 634(f), FAA, further requires the President to report 
to the Congress, as of September 30 and March 31 of each year, the 
status of each sales credit and each guaranteed loan under the AECA 
on which there remains any unpaid obligation or potential liability. 

Section 36(a), AECA, requires a quarterly report from the 
President to the Congress containing: 

(1) a listing of all letters of offer to sell any major 
defense equipment for $1,000,000 or more to each 
foreign country and international organization, by 
category, if such letters of offer have not been 
accepted or cancelled; 

(2) a listing of all letters of offer to sell any major 
defense equipment for $1 million or more that have been 
accepted during the fiscal year in which the report is 
submitted, together with the total value of all defense 
articles and services sold to each foreign country and 
international organization during the fiscal year; 

(3) the cumulative dollar amounts, by foreign country and 
international organization, of sales credit and guaranty 
agreements made during the fiscal year in which the 
report is submitted; 

(4) projections of the dollar amounts, by foreign country 
and international organization, of cash sales expected 
to be made, credits to be extended, and guaranty agree- 



raents to be made in the quarter of the fiscal year 
immediately following the quarter for which the report 
is submitted; 

(5) a projection with respect to all cash sales expected 
to be made and credits expected to be extended to each 
country and organization for the remainder of the fiscal 
year in which the report is transmitted; 

(6) an estimate of the number of officers and employees 
of the United States Government and of United States 
civilian contract personnel present in each such country 
at the end of that quarter for assignments in implementa- 
tion of sales and commercial exports under this Act; 

(7) an analysis and description of the FMS services being per- 
formed by officers and employees of the United States 
Government including the number of personnel so employed. 

Further, Section 813, Department of Defense Appropriation 
Authorization Act, 1976 [P.L. 94-106] as amended by Section 814, 
Department of Defense Appropriations Authorization Act, 1978 (P.L. 
95-70), requires that in the case of any letter of offer to sell 
or otherwise transfer defense articles that are valued at $25 million 
or more from United States active forces inventories or from current 
production, the Secretary of Defense shall submit a report to the 
Congress setting forth: (1) the impact of such sales or transfers 
on the current readiness of U.S. forces; (2) the adequacy of reimburse- 
ments to cover the full replacement cost of those items; and (3) for 
each article to be sold: (a) the initial issue quantity require- 
ment of U.S. forces for that article; (b) the percentage of such 
requirement already delivered to such forces or contracted for at 
the time of the report; (c) the timeable for meeting such require- 



70 



ment absent the proposed sale; and (d) the timetable for meeting such 
requirement if the sale is approved. 

N. CONGRESSIONAL INTEREST IN REDUCING ARMS SALES 

As indicated, the Congress attempted, in the International 
Security Assistance and Arms Export Control Act of 1976 [P.L. 94- 
329], to gain a greater voice in the policy aspects of arms sales 
decisions and greater knowledge of and control over proposed sales. 
Section 1, AECA, states that it shall be United States policy to 
"exert leadership in the world community to bring about arrangements 
for reducing the international trade in implements of war," and 
states the sense of Congress that the President should "seek to 
initiate multilateral discussions for the purpose of reaching 
agreements among the principal arms suppliers and arms purchasers 
and other countries with respect to the control of the international 
trade in armaments." Congress further expressed its sense that 
the President "should work actively with all nations to check and 
control the international sale and distribution of conventional 
weapons .. .and to encourage regional arms control agreements." 

As indicated, the Congress expressed its sense, in the AECA, 
that the aggregate value of defense articles and services sold under 
FMS programs or through commercial channels in any fiscal year "should 
not exceed current levels" (Section 1). 



71 



In addition, Section 202(b), Public Law, 94-329, directed the 

following study requirement: 

The President shall conduct a comprehensive study of 
the arms sales policies and practices of the United States 
Government, including policies and practices with respect 
to commercial arms sales, in order to determine whether 
such policies and practices should be changed. Such study 
shall examine the rationale for arms sales to foreign 
countries, the benefits to the United States of such arms 
sales, the risks to world peace as a result of such arms 
sales, trends in arms sales by the United States and other 
countries, and steps which might be taken by the United 
States to provide for limitations on arms sales. In 
addition, such study shall include an evaluation of the 
impact of United States arms sales policies on the economic 
and social development of foreign countries and considera- 
tion of steps which might be taken by the United States to 
encourage the maximum use of the resources of the developing 
countries to economic and social development purposes. 

The President was required to submit to the Congress no later 
than June 30, 1977 the findings of this study, along with recom- 
mendations for legislation as appropriate, as well as the efforts 
made by the United States during the preceding five years to initiate 
and otherwise encourage arms sales limitations, and the efforts 
currently being made along those lines. 

Congress also directed the Secretary of State, in consultation 
with the Secretary of Defense, to conduct a comprehensive study of 
the effects of the provisions of the Arms Export Control Act with 
a view to determining their consequences on (1) the foreign policy 
of the United States; (2) the balance of payments of the United States: 
(3) trade with foreign countries; (4) unemployment in the United 
States; and (5) weapons procurement by the Department of Defense. 
This study, along with recommendations for appropriate legislation. 



72 



was also required by June 30, 1977, one year after enactment of this 

provision (Section 218, International Security Assistance and Arms 

Export Control Act of 1976, P.L. 94-329). 

These studies requirements were consolidated into one study 

by the Department of State and were submitted to the Congress on 

J,/ 
June 30, 1977. 

0. PRESIDENT CARTER'S ARMS SALES POLICY 



On May 19, President Carter outlined his Administration's 
policy concerning conventional arms transfers (See Appendix I). 
This policy was based upon the studies required by Sections 202(b) 
and Section 218 of the International Security Assistance and Anns 
Export Control Act of 1976. 

In his statement, the President indicated that, "The virtually 
unrestrained spread of conventional weaponry threatens stability in 
every region of the world." The policy announced by the President 
contained two basic elements: 



...The United States will henceforth view arms 
transfers as an exceptional foreign policy imple- 
ment, to be used only in instance where it can be 
clearly demonstrated that the transfer contributes 
to our national security interests. 



l_/ U.S. Congress, Senate, Committee on Foreign Relations, Arms 
Transfer Policy, Report to Congress, 95th Congress, 1st Session, 
Committee Print, July 1977. Washington, U.S. Govt. Print. Off., 
1977, 107 pp. 



73 



...We will continue to utilize arms transfers to 
promote our security and the security of close 
friends. But, in the future, the burden ot persuas- 
ion will be on those who favor a particular arras 
sale, rather than those who oppose it. 

The President added, however, that "actual reductions in the 
worldwide traffic in arms will require multilateral cooperation ... The 
United States will meet with other arms suppliers... to begin discussions 
of possible measures for multilateral action." 

To implement the first element of this policy — that of unilateral 
United States restraint in the sale of arms — the President established 
a set of six controls applicable to all future arms transfers "except 
to those countries with which we have major defense treaties (NATO, 
Japan, Australia, and New Zealand)." These controls are: 

1. The dollar volume (in constant FY76 dollars) of new 
commitments under the Foreign Military Sales and Military 
Assistance Programs for weapons and weapons-related items 

in FY78 will be reduced from the FY77 total. Transfers which 
can clearly be classified as services are not covered, nor 
are commercial sales, which the U.S. Government monitors 
through the issuance of export licenses. Commercial sales 
are already significantly restrained by existing legislation 
and Executive Branch policy. 

2. The United States will not be the first supplier to 
introduce into a region newly-developed, advanced weapons 
systems which would create a new or significantly high combat 
capability. Also, any commitment for sale or coproduction of 
such weapons is prohibited until they are operationally deployed 
with U.S. forces, thus removing the incentive to promote foreign 
sales in an effort to lower unit costs for Defense Department 
procurement . 

3. Development or significant modification of advanced 
weapons systems solely for export will not be permitted. 



74 



4. Coproduction agreements for significant weapons, 
equipment, and major components (beyond assembly of sub- 
components and the fabrication of high-turnover spare parts) 
are prohibited. A limited class of items will be considered 
for coproduction arrangements, but with restriction on third- 
country exports, since these arrangements are intended 
primarily for the coproducer's requirements. 

5. In addition to existing requirements of the law, the 
United States, as a condition of sale for certain weapons, 
equipment, or major components, may stipulate that we will 
not entertain any requests for retransfers. By establishing 
at the outset that the United States will not entertain such 
requests, we can avoid unncessary bilateral friction caused 
by later denials. 

6. An amendment to the International Traffic in Arms 
Regulations will be issued, requiring policy level authoriza- 
tion by the Department of State for actions by agents of the 
United States or private manufacturers which might promote 
the sale of arms abroad. In addition, embassies and military 
representatives abroad will not promote the sale of arms 

and the Secretary of Defense will continue his review of 
government procedures, particularly procurement regulations, 
which may provide incentives for foreign sales. 



P. ARMS EXPORT CONTROL BOARD (AECB) 



In his report to the Congress on arms transfer policy on 
June 30, 1977, the Secretary of State pointed out that there 
presently was no single, formally established means within the 
Administration for policy control of all programs for the transfer 



y U.S. Congress. Senate. Committee on Foreign Relations 
Arms Transfer Policy: Report to Congress. 95th Congress. 1st 
Session, Committee Print. July 1977. op. cit. 



75 



of U.S. defense articles and services. Transfers under the FMS 
program are controlled, as has been indicated, through a informal 
system of direct coordination between the Departments of Detenst 
and State and ACDA, with the State Department making the final 
decision in most cases on individual sales. Sales which raise 
major policy issues, of course, are decided by the President. 

The Secretary of State, under the direction of the President, 
is charged with the responsibility for the general direction and 
continuous supervision of grant military assistance and training 
programs. His responsibilities (section 622(c), FAA) include 
determining whether there should be a military assistance or training 
program recommended for a particular country and the value thereof, 
so that such programs are integrated effectively with other -assistance 
programs and with the foreign policy of the United States. However, 
articles and services to be transferred under the military assistance 
or training programs are determined by the Def i'u->e Department. 

Requests for commercial export licenses (see pp. 86-88) are 
reviewed and approved by the Department of State which seeks informal 
advice from other agencies. 

According to the report submitted by the Secretary of State, 
this system has been "generally effective and reasonably efficient." 
It has, however, met the following problems: 

its essentially ad hoc and fragmented character; 
the multiplicity of decision channels; 



76 



the lack of a single document or coherent series of 
documents on policies, planning, and procedures; 

difficulty in controlling all significant decision 
points ; 

inadequate interagency planning. 



In order to centralize and formalize the decision-making process 
concerning arms transfers, the report indicated, an interagency Arras 
Export Control Board (AECB) would be established. This Board, 
created by modifying the charter of the Security Assistance Program 
Review Committee (SAPRC) (see p. 40), is an advisory body with 
policy planning and review functions. It is chaired by the Under- 
secretary of State for Security Assistance and has the same com- 
position as the former Security Assistance Program Review Committee 
(representatives from Departments of State, Treasury and Defense, 
Joint Chiefs of Staff, Arms Control and Disarmament Agency, National 
Security Council, Central Intelligence Agency, Agency for Inter- 
national Development, and Office of Management and Budget). Other 
representatives (such as Department of Commerce) attend Board 
meetings whenever matters under consideration may be of concern to 
them. 

The Arms Export Control Board will review, consult, and hear 

recommendations on security assistance and arms export control policy 

and on the following: 

— procedures for implementing the arms transfer policy 
conveyed by the Presidential statement of May 19; 



77 



— guidelines and criteria for setting priorities and making 
decisions ; 

— means for systematically collecting, analyzing, utilizing 
pertinent data, and for exchanging views of interested 
agencies ; 

— key transfers of defense articles and services as they 
relate to policy; 

— preparation and submission of all security assistance 
plans, programs, budgets, and legislative proposals. 

The Arms Export Control Board has also established several 
interagency working groups responsible to it. These working groups 
also have policy planning and review functions but are not decision- 
making bodies. Their deliberations, along with diverging views, 
are provided to the Arms Export Control Board. These working groups, 
in general, work continously within the regular channels of agency 
responsibility and interagency coordination. When new issues or 
substantive policy questions arise, these groups formulate the 
issues and options for the Board's consideration. These working 
groups and their areas of concern are as follows: 

Working Groups Areas of Concern 

1. Arms Transfer Policy Develop recommendations for 

Planning policies and procedures to 

implement the President's arms 
Chair: State Department transfer policies; recommend 

(Director of PM) policies concerning applica- 

bility of human rights concerns 
to arms transfer policy; monitor 
implementation and recommend 
changes in policies, procedures, 
or statutes as needed. 

Review individual arms transfer 
proposals focusing on those 
which require Congressional 
notification. Prepare re- 



78 



Working Groups 



Areas of Concern 



2. Security Assistance 
Program Review 

Chair: State Department 
(Director of PM) 

3. Administration and 
Management 

Chair: Defense Depart- 
ment (Director, DSAA) 



4. Middle East Arms 
T ransfer Panel 

Chair: State Department 
(Director of PM) 



commendations on key transfers 
for consideration. Prepare 
recommendations on key 
transfers for consideration 
by the AECB. Monitor license 
violations and retransfer requests 

Prepare plans for multilateral 
initiatives designed to secure 
supplier and recipient 
restraint; monitor such 
multilateral efforts; monitor 
non-U. S, arms transfers. 

Prepare Security Assistance 
programs, budgets, and legis- 
lative proposals for discussion 
by the AECB. 



Monitor administration of 
arms transfer programs. 
Propose remedies for administra- 
tive problems (e.g., shipping, 
financing). Design procedures 
for improved data acquisition 
and utilization. 

Monitor and coordinate technical 
aspects of the transfer of 
defense articles and services 
to Middle East countries. 



5 . Arms Control Impact 
Chair: ACDA 



Assess the general impact of 
arms transfer policy on arms 
races, regional stability, 
and the probability and 
intensity of conflict. 



CURRENT STATUS 



In the remaining months of the fiscal year subsequent to 
the President's policy announcement, the Administration transmitted 
46 separate arms sales notifications to Congress involving 19 



79 



separate countries and involving goods and services totalling 
over $4.5 billion, including a controversial offer to sell Airborne 
Warning and Control System (AWACS) aircraft to Iran. In addition, 
it was also announced or reported during this same period that 
the United States was prepared to negotiate substantial arms sales 
to Saudi Arabia, Egypt, Chad, the Sudan, and Somalia (the offer 
to Somalia was later withdrawn). The Administration also announced 
the necessity for a substantial arms transfer program for South 
Korea in order to strengthen that nation's defenses over the next 
five years during the contemplated withdrawal of American ground 
forces . 

These actual and proposed sales called into question the 
President's policy of using arms transfers as an "exceptional 
foreign policy implement." Indeed, arms sales by the United States 
appeared to continue as a rather routine tool of American policy. 
Thus, there currently exists in the Congress some scepticism concerning 
the effectiveness of the annnounced policy in restricting U.S. arms 
exports . 

The Administration, however, contends that it is too early 
to judge the effectiveness of the President's policy. It is 
further contended that recent arms transfer approvals made after 
the announcement of the president's policy were commitments made 
by the previous Administration which had to be honored in order to 
assure these allies that the United States was a dependable supplier. 



80 



What has changed, Administration spokesmen state, is that there 

is a heightened sensitivity to arms sales concerns within the 

Executive Branch, a more positive and centralized control of 

the management of arms transfers, new regulations concerning the 

manner in which arms transfers are initiated and approved, and a 

firm commitment to lowering sales and to negotiating a multilateral 

approach to a reduction in the worldwide traffic in arras. In 

this latter respect, formal talks with the Soviet Union on limiting 

Soviet and American conventional arms sales were opened in 

Washington in mid-December, 1977. The President is also reported 

to have raised this issue with the French [.resident during his 

visit to that country in January, 1978. 

On February 1, 1978, the President announced that arms transfer 

agreements for Fiscal Year 1978 covered by the ceiling established 

in his policy statement of May 19 would be reduced by $740 million. 

New commitments under the Foreign Military Sales and Military 

Assistance programs for weapons and weapons-related items to all 

countries except NATO, Japan, Australia, and New Zealand would 

therefore not exceed $8.6 billion, a reduction of 8 percent, 

figured in constant FY 1976 dollars, from the comparable figure 

of $9.3 billion for Fiscal Year 1977. The President stated: 

A larger cut in the ceiling would violate commitments 
already made, including our historic interest in the 
security of the Middle East, and would ignore the 
continuing realities of world politics and risk the 
confidence and security of those nations with whom 
the United States has vital and shared foreign policy 
and security interests. A smaller reduction would 
neglect our responsibility to set an example of restraint 
that others might follow [See Appendix X]. 



81 



The White House also announced, however, that total arms sales 
to all nations in FY 1978 was likely to rise above $13 billion, 
almost $2 billion over FY 1977 sales. 

In testimony before a subcommittee of the House International 
Relations Committee on February 1, 1978, Lucy Wilson Benson, 
Undersecretary of State for Security Assistance, indicated that, 
as of that date, over half of the ceiling dollars were already 
"pretty much committed." The residual, less than $4 billion, 
is the discretionary sum available to the Administration to apply 
to new major sales of defense articles and services in FY 1978 
under the FMS program. 

The proposal by the Administration, announced on February 14, 
1978, to sell $4.8 billion of jet aircraft to Egypt, Saudi Arabia, 
and Israel would appear to threaten the President's ceiling, however 



1^1 "Rise in Total U.S. Arms Sales Seen Despite Curb Set 
for Fiscal 1978," New York Times, February 2, 1978, pg. 1. 

2/ Testimony of the Honorable Lucy Wilson Benson, Under- 
Secretary of State for Security Assistance, Science, and Technology 
before the Subcommittee on International Security and Scientific 
Affairs, Committee on International Relations, House of Representatives 
February 1, 1978, p. 8. 



V. COMMERCIAL SALES 



A. DEFINITION 

Conn nercial arms sales do not constitute a Government program 
as such, and no Government expenditures are involved. These sales 
involve the direct transfer of arms, equipment, and services 
between domestic private corporations and foreign governments (or 
other foreign purchasers). Payment is arranged on a private con- 
tract basis. Payments may be financed by sources available to 
the foreign purchaser abroad, or by a U.S. bank, or by the Export- 
Import Bank (in the case of a developed country purchaser), or by 
financing authorized by the Arms Export Control Act. Regardless 
of the source of financing, however the sale is considered a 
commercial sale if the U.S. Government neither procures nor sells 
the items. 

B. LIMITATIONS ON COMMERCIAL SALES 



The International Security Assistance and Arms Export Control 
Act of 1976 (Public Law 94-329) made major changes in the legisla- 
tion concerning commercial sales in order to increase congressional 
control over those sales. Section 414 of the Mutual Security Act 
of 1954, which had provided authority to the President to control 
the export (and import) of arms, ammunition, and implements of war 
and technical data relating thereto, was repealed and replaced by 
Section 38, AECA, and other provisions. The so-called Fulbright 

(82) 



83 



amendment to the Foreign Military Sales Act, which stated congress- 
ional preference for the reduction of government-to-government 
arms sales so as to return such transactions to commercial 
channels, was also repealed. 

Section 38, AECA, gives the President authority to control 
the export and import of defense articles and services, to designate 
those items to be considered as defense items and services, to 
promulgate regulations for the import and export of such articles 
and services, and to provide foreign policy guidance to persons 
involved in the export and import of such items and services. 

Section 38, AECA, further directs that no defense articles 
or services designated by the President may be exported or imported 
without a license issued in accordance with the AECA, except for 
exports by an agency of the U.S. Government for official use or 
for carrying out any foreign assistance sales program. 

Section 38(b)(3) further restricts commercial sales of major 
defense equipment as defined in Section 47 of the Act in the amount 
of $25 million or more to members of NATO, Australia, New Zealand, 
Japan or in implementation of a coproduction agreement between 
the United States and a foreign government which has been approved 
by the Congress. Sales of $25 million or more to other countries 
are prohibited through commercial channels and must be conducted 
on a government-to-government basis under the FMS program. 

Commercial sales to Chile are prohibited, as are sales to 
Argentina after September 30, 1978 (see pg. 22). 



23-874 O - 78 - 7 



84 



C. ADMINISTRATION OF THE PROGRAM 

The Department of State, throught its Office of Munitions 
Control in the Bureau of Political-Military Affairs, has been 
delegated the responsibility for administering the United States 
commercial arms sales program. That office prescribes Inter- 
national Traffic in Arms Regulations (ITAR) in Title 32 of 
the Code of Federal Regulations. The ITAR lists and defines 
arms, ammunition, and implements of war, and enumerates the 
articles controlled by the Office of Munitions Control. This 
is the U.S. Munitions List. These items are decided upon by 
the Department of State with the concurrence of the Department 
of Defense. 

Section 38(b)(1) requires that every person (other than 
government employees acting in an official capacity) who engages 
in the business of manufacturing, exporting, or importing any 
defense article or service designated on The Munitions List must 
register with the Office of Munitions Control and pay a registra- 
tion fee. 

D. REQUIREMENTS FOR PRIOR APPROVAL 

In his May 19 policy statement, President Carter announced 
that "an amendment to the International Traffie in Arms Regulations 
(ITAR) will be issued, requiring policy level authorization by 
the Department of State for actions by agents of the United States 
or private manufacturers which promote the sale of arms abroad." 
The new rule, which became effective September 1, 1977, requires 



85 



State Department approval as a "condition precedent to any proposal 
or presentation designed to constitute a basis for a decision 
to purchase, either through commercial or Foreign Military Sales 
procedures, made to any foreign government or foreign national 
if:" 

(1) Significant combat equipment valued at $7 
million or more is involved; and 

(2) the equipment involved is for the use of 
a foreign nation's armed forces; and 

(3) the sale would involve export of any item 
on the U.S. Munitions List or any technical 
data relating to an item on this list; or if 

(4) Technical assistance or a manufacturing 
license agreement for the "production or 
assembly of significant combat equipment" 
on the Munitions List is involved; and 

(5) the equipment involved is for the use of 
a foreign nation's armed forces; and 

(6) the technical assistance or manufacturing 
license agreement would involve the export 
from the U.S. of any item on the U.S. 
Munitions List or of any technical data relating 
to an item on the U.S. Munitions List. 

Further, the regulation defines a "proposal or presentation 

designed to constitute a basis for a decision to purchase" as 

the communication of information in sufficient detail that the 

person communicating that information knew or should known that 

it would permit an intended purchaser to decide to acquire the 

particular combat equipment, technical information, or license 

in question. Thus, presentations which describe the equipment's 



86 



performance characteristics, probable availability, and price 

would require the State Department's prior approval where the 

above criteria are met in any given case. However, prior approval 

by the State Department would not be required for advertising 

in a general circulation publication, for preliminary discussion 

to ascertain market potential, or for merely calling attention 

to the fact that a particular item is manufactured by or is available 

from a company. 

The requirement to obtain prior approval may be met by 
"any of the following": 

(1) Obtaining from the State Department a "written 
statement approving the proposed sale or approv- 
ing the making of a proposal or presentation"; 

(2) Obtaining from the State Department a "license 
for the export of technical data relating to 
the proposed sale to the country concerned" ; 

(3) Obtaining from the State Department a "temporary 
export license relating to the proposed sale for 

a demonstration to the armed forces of the country 
of export"; 

E. EXPORT LICENSES 



After these negotiations have been concluded under the 

permission granted under the new regulation, an export license 

is still required when items on The Munitions List are to be: 

commercially exported; 

commercially exported temporarily for demonstra- 
EisC-eS^ other purposes and returned to the United 



87 



commercially brought to the United States in 
transit to a third country or returned to the 
country of origin; 

commercially described using information defined 
as technical data; and 

commercially described for purposes of having 
technical data used under manufacturing license 
and technical assistance agreements. 



Under the new rule previously discussed, every application 
for an export license to implement a sale or a technical assistance 
or manufacturing license agreement "must be accompanied by a state- 
ment from the applicant which either": 

(1) Makes reference "to a specific approval previously 
granted with respect to the transaction"; or 

(2) Makes a certification that no presentation or 
proposal requiring prior approval has been 
made . 

The State Department, in addition, may require a similar state- 
ment from the Foreign Military Sales contractor concerned in any 
case where the United States Government receives a request for 
a letter of offer for a sale which meets the criteria specified. 

The new amendment states that, in addition to other remedies 
and penalties prescribed by law, the failure to obtain the State 
Department's prior approval as specified in the regulation, may 
be considered to be a reason for disapproval of an export license 
application. 



88 



The Office of Munitions Control judges each application based 
on applicable statutes, the ITAR, U.S. Government policies originating 
with the President and the Secretary of State, precedents, U.S. 
foreign, political, and economic policies, security policies, technical 
views, whether a particular export is in the overall interest of 
the United States, and other factors. Office of Munitions Control 
officials may seek the views of the Department of Defense, the 
National Aeronautics and Space Administration, the various regional 
and functional bureaus in the Department of State, and other 
executive agencies. Section 38(a)(2), AECA, directs that 
decisions on issuing export licenses shall be made in coordination 
with the Director, United States Arms Control and Disarmament 
Agency (ACDA), and shall take into account the Director's opinion 
as to whether the export of an article will contribute to an arms 
race, increase the possibility of outbreak or escalation of con- 
flict, or prejudice the development of bilateral or multilateral 
arms control arrangements. Charts 2 and 3 illustrate the processing 
of license applications. 

Section 42(e)(2)(A), AECA, requires that each export license 
shall provide that the license may be revoked, suspended, or amended 
by the Secretary of State, without prior notice, whenever he deems 
such action to be advisable. 



89 



CHART 2 



PROCESSING EXPORTS OF U.S. MUNITIONS LIST ARTICLES 

U.S. COMMERCIAL SALE TO FOREIGN COMMERCIAL PURCHASER 



OFFICE OF 
MJMfTlONS CONTROL 

pmM: 





T 


IKE USE 


souRa 

us COMPANY 
OR PERSON 


*mic*noi. 



FREIGHT 
FORWARDER 



no»«IE Tl«PISAtIIOMi . ■ I 
us SEUE» IS » "«AI( (0< 
INOIVIOU/U «M0 iHf PutCMA 
EOfEICN COWUT Ot 



UUHX 

T 



us CUSTOMS 

OR 

U S POSTMASTER 



I EOUIPMEIir 

I 



PM/MC 
COORDINATES 
INTER AND INTRA 
DEPARTMENT AllY. 
COMMERCIAL 
(US SOURCE) 
TRANSACTIONS 



FOREIGN 

PRIVATE I 

COMPANIES 

OR PERSONS 



LEGEND 
^^—— Ptrti HOW 

.— EOUirMNI H 



Source: Office of Munitions Control, Department of State. 



90 



CHART 3 



PROCESSING EXPORTS OF U.S. MUNITIONS LIST ARTICLES 

U.S. COMMERCIAL SALE TO FOREIGN GOVERNMENT PURCHASER 



FOREIGN GOVERNMENT 

PURCHASER 

FROM COMMERCIAL 

US SOURCE 



SOURCE 

Uj COMPANY 
OR PERSON 



FOREIGN GOVERNMENT 

EMBASSY OR 
PURCHASING MISSION 






OFFICE OF 

MUNHTONS CONTTJOL 

PU/MC 



COMMKIAl IIANSACTIONV .a. 
mi(N TH( U S SUUI IS A KlvATf 
CO«f ANT 01 mnnOUAl AND THE 

rutCHASti ot (NO tiut li A 

imtl&N MIUIAIT W OIKtt 
COnitlMfNI AGiNO 



1 

T 



FREIGHT 
FORWARDER 



tOUIfMfNT UCSN« 



*; 




LEGEND 

lOUlfM 


ow 
Ni (itm 


PM/MC 
COORDINATES 
INTER AK4D INTRA 
DEPARTMENTALLT 
COMMERCIAL 
lUS SOURCE) 
TRANSACTIONS 


US CUSTOMS 

OR 

US POSTMASTER 








! 
Y 




FOREIGN COUNTRY 
GOVT 
AGENCIES 





Source: Office of Munitions Control, Department of State. 



91 



F. AGENT'S FEES 

Legislation concerning agent's fees or payments in the conduct 
of commercial arms sales is the same as that for government-to- 
government sales (Section 39, AECA)(see p. 54-55). Applicants for 
export licenses must provide information concerning political 
contributions, fees, or commissions which might have been offered 
or paid, or are expected to be paid in connection with the sale. 

G. ADDITIONAL RESTRICTIONS 



In addition to other restrictions on and requirements for 
the commercial export of defense items. Section 38(b)(1) requires 
that export regulations shall prohibit the return to the United 
States for sale in the United States (other than for U.S. Armed 
Forces and its allies or for state for local law enforcement 
agencies) of any military firearms or ammunition of United States 
manufacture furnished to any foreign government under any assistance 
or sales program, whether or not enhanced in value or improved 
in condition. This prohibition does not extend to firearms that 
have been so substantially altered as to become, in effect, articles 
of foreign manufacture. 

H. REQUIRED REPORTS 

In addition to the required reports to Congress concerning 
commercial sales which have already been discussed. Section 36(c), 
AECA, requires that the President transmit to the Congress not 



92 



less than thirty days prior to issuing an export license for 
any major defense equipment in the amount of $7 million or more 
or for defense articles and services of $25 million or more, a 
certification stating: (1) the country or international organiza- 
tion to which such export shall be made; (2) the dollar amount 
of the items to be exported; and (3) a description of the articles 
to be exported. Section 36(d) requires a similar report for any 
United States commercial, technical assistance, or manufacturing 
license agreement for any country, except members of NATO, which 
involves the manufacture abroad of significant combat equipment 
on the United States Munitions List. Neither of these sections, 
however, gives the Congress disapproval authority over these 
commercial sales. 

I. REVIEW OF CONTROLS OF NONLETHAL ITEMS 

During consideration of the International Security Assistance 
Act of 1977, concern was expressed in both Houses of the Congress 
that many of the items listed on the Munitions List whose export 
was controlled under ITAR were not "arms" at all and should not 
be subjected to stringent controls nor be counted as "arms sales" 
by the United States. In testimony before the Senate Foreign 

y 

Relations Committee, the Director, Defense Security Assistance 



\J U.S. Congress. Senate. Committee on Foreign Relations 
Security Assistance Authorization. Hearings on S. 1160. 95th Congress 
1st Session, pp. 15-16. 



93 



Agency, indicated that of total U.S. FMS arms sales agreements 
in FY 1976, only 36% consisted of weapons systems or munitions, 
while the remaining 65% comprised spare parts, supporting equip- 
ment, and supporting services.* For FY 1977, the comparable figures 
are 39% and 63%. Thus, the vast majority of U.S. foreign military 
sales were not actually "arms" in the strictest sense. 

In order to clarify the definition as to what constituted 
an "arms sale" and what items should be included on the Munitions 
List, Section 27 of the International Security Assistance Act of 
1977 (P.L. 95-92) directed the President to undertake a review of 
all regulations "relating to arms control" for the purpose of 
"defining and categorizing lethal and non-lethal products and 
establishing the appropriate level of control for each category." 

J. TRANSFERS OF TECHNOLOGY 

The transfer of technology between the United States and 
other nations, particularly through the sale of military equip- 
ment, can have a profound effect upon this country's national 
security. To protect U.S. national security interests, it has 
been found necessary to institute various controls over the 
transfer of certain elements of U.S. technology. However, as 



* SUPPORTING EQUIPMENT — training and cargo aircraft, tankers 
tugs, barges, trucks, trailers, radar, communications equipment, 
and other equipment and supplies. 

SUPPORTING SERVICES—construction, supply operations, training, 
technical and administrative services. 



94 



the sale of sophisticated military equipment has increased, the 
possibility of U.S. advanced military technology falling into 
unfriendly hands has been more frequently raised. In order 
to address this question. Section 24, International Security 
Assistance Act of 1977 (P.L. 95-92) requires the President 
to conduct a comprehensive study of the policies and practices 
of the United States Government with respect to the military 
and national security implications of international transfers 
of technology. The purpose of the study is to determine whether 
such policies and practices should be changed, and whether present 
statutory and administrative controls are adequate. The study is 
required by August 4, 1978, and is to contain recommendations for 
legislative and administrative action deemed appropriate by the 
President . 

K. CURRENT STATUS 



On their face, the recent changes to the ITAR appear to 
place important new tools in the hands of the State Department 
which could be utilized effectively to prohibit conventional 
commercial arms transfers that the Department found to be at 
variance with the national security interests and foreign policy 
of the United States. Not only do attempts to promote significant 
commercial sales now have to be approved in advance by the 
State Department, but the failure to receive such advance approval 



95 



places the exporter in the position of potentially having his 
license to export or the foreign government's request for a letter 
of offer denied even after an arrangement has been established 
with the foreign client. 

Furthermore, under the proposed changes in the ITAR, satis- 
factory compliance with the stipulations regarding prior approval 
of promotional activities does not ensure State Department approval 
of a proposed export transaction at a later date. A company could 
receive permission to promote a sale, do so, and make a request 
for an export license after successfully inducing a foreign 
government to buy their product. At that point, the State Depart- 
ment would still have the legal option to refuse to grant the export 
license on the grounds that it would not be in the interests 
of the United States to have the sale consummated. Granting 
permission to promote a product does not necessarily obligate 
the State Department to permit its exportation, as a practical 
matter, the same pressures from vendors and foreign purchasers 
and the same foreign policy and national security issues would 
arise at that point whether the sale were through commercial or 
government channels. 

Decisions to grant or deny export license or letters of 
offer will still be made on a case-by-case basis weighing the 
various factors involved at the time a request for a given license 



96 



or letter of offer is made. In this context, the ability of the 
Administration to restrain unilaterally U.S. arms sales and 
exports appears to be strongly supported by the ITAR amendment. 
The ultimate test of how much restraint is imposed by the ITAR 
changes will be how rigorously the Administration uses them at 
the beginning of the arms transfer process to prevent arms 
commercial arms sales from coming to fruition. 

Nevertheless, this new control over commercial sales can 
have only limited impact on reducing total U.S. arms transfers. ' 
Commercial arms sales are excluded from dollar ceilings announced 
in the President's arms transfer policy. While they are "monitored" 
by the U.S. Government as indicated above, they are not subject 
to numerous other controls. The export licensing requirements 
pertain to "deliveries" rather than "orders," generally speaking. 
The recent ITAR amendments requiring approval before a proposal 
or presentation is made which is designed to constitute a basis 
for a decision to purchase from a U.S. commercial source does 
not cover: (1) items on the U.S. Munitions List which the 
Department of State determines are not "significant combat 
equipment," nor (2) significant combat equipment valued at 
less than $7 million, nor (3) items on the U.S. Munitions 
List which are intended for use by groups other than the armed 
forces of a foreign country. 



k 



I 



97 



In addition, the vast majority of U.S. arms transfers remain 
in government-to-governraent channels. In FY 1977, for example, 
commercial deliveries were estimated as $1,247.9 million while 
FMS deliveries totalled $6,898.1 million (FMS sales agreements 
that year for future delivery yere $11,190.3 million). 

This is true for one or more of the following reasons: 

a. Major weapons systems may involve substantial amounts 
of Government Furnished Equipment (GFE) . Since the 
U.S. Government is not authorized to sell military 
equipment to private parties, such GFE can only be 
sold to foreign governments or international organiza- 
tions. This GFE likewise cannot be sold to U.S. prime 
manufacturers for incorporation in weapons systems 
and onward sale to foreign buyers. 

b. For some special situations, the U.S. Government 
wishes to exercise the control that is more easily 
achieved with the FMS program. 

c. Classified equipment, which must in any event be 
delivered through Government channels, and items 
produced in U.S. arsenals, are often easier to sell 
through the Government channel. 

d. Sales made under supply support arrangements and 
similar logistics sales arrangements are handled 
through FMS channels as the only practicable way 

of permitting the armed forces of friends and allies 
to "buy into" the U.S. logistics system and to 
obtain support therefrom under the same procedure 
as do using U.S. units. 

e. There are some transactions which the procuring 
government, for reasons of insufficient procurement 
experience or for other reasons, insists should be 
concluded on a government-to-government basis. 

f. Some transactions may be part of a larger government- 
to-government agreement, such as offset or other 
arrangements . 



98 



g. There may be occasions when U.S. industry requests 
a governraent-to-government transaction to avoid 
political or trade reprisals. 

There is a wide variety of other reasons for casting the 

sale into a government-to-government mode rather than a commerical 

one. Certain training and advisory services can be provided 

only by Defense Department personnel in absence of a commercial 

availability. Where the financial security of the U.S. vendor 

firm is shakey, the foreign government may wish the added assurance 

that the U.S. Government supports the sale through its direct 

participation. Of course, there is often an implicit political 

component in an FMS transaction that transcends the formal words 

of the contract. 



VI. SHIP TRANSFERS 

A. DEFINITION 

The ship transfer program involves the grant, sale, lease, 
or loan of U.S. naval vessels to foreign governments. The United 
States has transferred Navy vessels to other countries since the 
end of World War II. During this time it has given away, loaned, 
sold, or transferred about 4,000 ships and craft of various descrip- 
tions to 58 countries. The total acquisition value of all ships 
loaned or leased, however, is slightly less than $1 billion. 

Ships granted to friendly foreign countries under the 
Military Assistance Program or sold to a foreign country under 
the Arms Export Control Act (AECA) (except for new construction 
sales) have been determined to be no longer needed by the Navy 
because of their obsolescence and/or degraded material condition 
and have been stricken from the U.S. Naval Vessel Register. 
Extension of their service life or continued operations in the' 
U.S. Navy would be impossible without an investment to overhaul 
and modernize the ships which would not be considered cost effective 
Further, the end result of such modernization would still be a 
limited capability in an old hull. Were the ships not made 
available to friendly foreign countries, they would most likely 
be sold for scrap. Instead, these ships, with a comparatively 
small investment, can provide a significant improvement to 

(99) 



23-874 O - 78 - 8 



100 



foreign navies whose operations may require ship capabilities less 
sophisticated than those required for the U.S. Navy. Transfer of 
these ships is normally effected on an "as is, where is" basis, 
and title passes to the recipient on transfer. Whenever possible, 
transfers are effected on a "hot ship" basis, wherein the foreign 
crew "relieves the watch" of the U.S. Navy crew coincident with 
the decommissioning of the ship from the U.S. Navy. This eliminates 
both inactivation costs for the U.S. and activation costs for the 
purchasing navy. 

Coincident with the transfer, the purchasing navy normally 
contracts for follow-on logistic support from U.S. Navy or 
commercial sources, and often arranges for repairs and overhaul 
in U.S. commercial shipyards. 

Ships loaned and leased to foreign countries are still 
considered part of the U.S. mobilization reserve but, for budgetary 
or other reasons, have been removed from the active fleet. In 
such transfers, the ship is still carried on the Naval Vessel 
Register and title remains with the United States. The basic 
difference in execution of leases and loan is that loans are 
normally a government-to-government agreement and leases are 
on a navy-to-navy basis. It has been administration policy since 
1972 to sell ships as these leases/loans expire, thus tending to 
reduce and eventually to eliminate this program. 



101 



B . AUTHORITY 

Title 10, Section 7307, United States Code, states that 
capital ships* may not be transferred by any method to another 
nation unless approved by law. The loan or sale of such vessels 
to foreign countries, therefore, requires specific legislation. 
Since 1951, nineteen public laws have been passed which authorized 
the transfer of 191 capital ships. The most recent capital ship 
legislation (Public Law 94-457, approved October 5, 1976) authorized 
the sale of ships to Spain, Korea, Greece, Argentina, the Republic 
of China, Columbia, Federal Republic of Germany, Iran, Pakistan, 
Venezuela and the Philippines. 

Noncapital ships, until 1974, could be loaned under the 
Foreign Assistance Act without the specific authority of the 
Congress. However, the Department of Defense also used the 
general leasing authority amounting to a loan in Title 10, Section 
2667, United States Code, for this purpose. This section, which 
is not related to foreign assistance, permits the leasing of 
all manner of property in a broad sense without limitation on 
the value or quantity which may be leased. Thus, until 1974, 
there was little or no legislative control over the loan or 
leasing, of non-capital ships. The FY 1974 congressional presentation 
contained no identifiable information on ship loans or leases. 



* Capital ships are battleships, cruisers, carriers, 
destroyers, destroyer escorts, and submarines. All others are 
considered non-capital ships. 



102 



C. GAP REPORT ON SHIP TRANSFER PROCEDURES 

The General Accounting Office (GAO), in investigating the 
financing of ship transfers in 1973, found that in FY 1973 the 
Navy spent almost $13.2 million, for which it was not reimbursed, 
to overhaul and repair 13 ships which were then transferred to 
foreign countries. These expenditures occurred at a time when 
the Secretary of the Navy, in FY 1974 budget hearings, testified 
before the Senate Armed Services Committee that funding constraints 
had resulted in deferral of ship maintenance and major overhauls 
in the active U.S. fleet, thus adversely affecting fleet readiness. 

In addition, the GAO report indicated that some $5 million 
in equipment, torpedoes, ammunition and other resources were trans- 
ferred along with these ships without reimbursement. Such non- 
reimbursed expenditures by the Navy, the GAO concluded, constituted 
a form of "hidden" foreign assistance in the ship transfer program 
which was not apparent to the appropriate committees of Congress. 

D. CURRENT PROCEDURES 



The Foreign Assistance Act (FAA) of 1973 (P.L. 93-189), 
December 17, 1973, tightened loan procedures to some extent. 
The Foreign Assistance Act of 1961 was amended by this legislation 
to provide that while a defense article or service is on loan, 



1/ How Ship Transfers to Other Countries Are Financed, 
General Accounting Office Report to the Congress, B-163742, 
June 24, 1974. 



103 



there shall be a charge to the military assistance appropriation 

for any fiscal year based on: (1) the out-of-pocket expenses authorized 

to be incurred in connection with the loan, and (2) the depreciation 

which occurs during the year while the article is on loan (Section 

503(c)). 

Section 702 of the Defense Department Procurement Authoriza- 
tion Act (P.L. 93-365), August 5, 1974, placed additional restric- 
tions on the ship transfer program. This section (the Byrd 
Amendment) provides that no naval vessel in excess of 2,000 tons 
or less than 20 years of age may be sold, leased, granted, loaned, 
bartered, transferred, or otherwise disposed of to another nation 
unless the disposition thereof has been authorized by law. The 
section also provides that naval vessels not subject to this 
provision may be sold, leased, granted, loaned, bartered, trans- 
ferred, or otherwise disposed of to another nation in accordance 
with applicable provisions of law only after the Secretary of 
the Navy (or his designee) has notified the Committees on Armed 
Services of the Congress in writing of the proposed disposition 
and thirty days of a continuous session of Congress have expired 
following the date on which notice was transmitted. 

Under this provision, the Department of Defense, during 1976, 
forwarded to the Congress thirteen separate legislative proposals 
to authorize the transfer of some forty-nine ships to twelve 



104 



foreign governments. Hearings on these transfers were held before 
the Subcommittee on General Legislation of the Senate Armed Services 
Committee on July 28, 1976, and on August 5 an original bill (S. 3734) 
which consolidated all of these proposed sales (except for two 
patrol boats to Greece and two destroyers to Brazil, which the 
Committee deferred) was introduced in the Senate by the Subcommittee 
Chairman, Senator Byrd . The measure passed the Senate on August 
25, passed the House without amendment on September 27, and was 
signed by the President on October 5, 1976 (P.L. 94-457). 

In addition to authorizing the sale of these particular 
ships, P.L. 94-457 also amended the Byrd Amendment (Section 702, 
P.L. 93-365) to increase the weight limitation to 3000 tons for 
ships requiring legislative authorization for transfer. Navy 
witnesses had testified that this increased limitation would 
reduce the legislative and administrative burden incident to the 
sale of these older ships while still maintaining congressional 
control over such transfers. 

E. CURRENT STATUS 



Although the ship transfer program involves the lowest 
monetary value of any United States arras transfer program, it 
now receives extensive congressional oversight and control. In 
practice, this control has proven largely effective and workable to 
date, with the legislation modified slightly to make these control 
procedures less burdensome administratively. In addition, the 



105 



number of ship transfers is diminishing as the number of available 
ships in the inactive fleet and those stricken from the active 
fleet diminishes. The majority of present sales are of those 
ships previously on loan or lease as those arrangements expire. 



VII. OTHER SECURITY ASSISTANCE PROGRAMS 

A. DEFINITION 

Security Assistance is defined by Section 502B(d)(2) of the 
FAA as military assistance, security supporting assistance, military 
education and training, Middle East assistance programs, commercial 
exports licensed by the Department of State, and arms sales under 
the Arms Export Control Act. Other than the military assistance 
program, commercial exports licensed by the Department of State, 
and arms sales programs, these additional programs do not involve 
the transfer of arms. 

B. SECURITY SUPPORTING ASSISTANCE 



1. Definition 

Security Supporting Assistance is defined in Section 531, 
FAA, as assistance to friendly countries, organizations, and bodies 
eligible to receive assistance to promote or support economic or 
political stability. This form of assistance can be traced back 
to the Marshall Plan. During the period 1951-1960, the funds 
were characterized as "defense support." During the Mutual 
Security Act period (Fiscal Years 1953-1961), $8,853 billion 
was provided for this purpose, primarily to the nations of 
Western Europe. The designation of this type of assistance 
was changed to "supporting assistance" with the passage of the 
Foreign Assistance Act (FAA) in 1961. The present title was 
adopted in 1971. This type of assistance has historically been 

(106) 



107 



intended to assist countries whose economies are burdened by major 
defense programs. Basically, Security Supporting Assistance is 
designed as budgetary support. The recipient country is provided 
with foreign exchange, allowing a higher level of imports and 
general economic activity than would otherwise have been the case 
or, as a substitute, allowing the recipient to expend his own 
budgetary resources for programs which would not otherwise have 
been funded. Security Supporting Assistance has frequently been 
used as a tool for limiting inflation in the recipient country, 
thereby contributing to political and economic stability. 

2. Purposes 

The use of Security Supporting Assistance funds in a 
given country depends on the perceived degree of importance of 
that country to U.S. foreign policy objectives, particularly in 
terms of potential impact on U.S. national security interests. 
Security Supporting Assistance funds normally contribute to some 
degree to the economic growth or to the developmental goals of 
the recipient country, but the U.S. motive in providing these 
funds is neither economic growth or development per se ; rather 
the specific purpose is to stabilize the political or economic 
situation vis-a-vis a given security situation. Security Supporting 
Assistance seeks, therefore, to assist the recipient nation to 
overcome an immediate security or defense problem while avoiding 
simultaneous deterioration of its national economy. 



L 



108 



3. Flexibility of the Program 

In the early 1970' s, the major portion of Security Supporting 
Assistance funds were directed toward Southeast Asia. In FY 1974, 
funds for Southeast Asia were budgeted separately in the Indochina 
Postwar Reconstruction program and the amount appropriated for 
supporting assistance declined. In FY 1975, however, the flexibility 
of this program was demonstrated by a broadened and expanded program 
in the Middle East. Funds were provided for Jordan to help combat 
the impact of worldwide inflation on that country's budget. Con- 
tinued economic assistance for Israel was provided, and smaller 
supporting assistance programs were continued for Malta, Spain, 
and U.N. Forces in Cyprus. In FY 1976, funds were added for 
Syria and for Zaire. Funds to carry out the non-military aspects 
of the United States-Spain Treaty of Friendship and Cooperation 
are also contained in this program. 

4. Current Status 

The flexibility of the program continues to be demonstrated 
by Administration requests for FY 1978 for an expanded assistance 
program for African countries. The International Security Assistance 
Act of 1977 (P.L. 95-92) added Section 533, Southern Africa Special 
Assistance Fund to Chapter 4 (Security Supporting Assistance) of 
Part II of the Foreign Assistance Act. This section authorized 
$80 million of the total Security Supporting Assistance program 
authorization of $1.89 billion for the countries of southern Africa 
to address the problems caused by the economic dislocation resulting 
from the conflict in that region. Such funds, the legislation 



109 



states, "may be used to provide assistance to African refugees 

and persons displaced by war and internal strife in southern Africa, 

to improve transportation links interrupted or jeopardized by 

regional political conflicts, and to provide trade credits for 

the purchase of United States products to those countries in the 

region adversely affected by blocked outlets for their exports 

and by the overall strains in the world economy." 

Funds are specifically authorized for Botswana, Lesotho, and 
Swaziland. No assistance may be furnished Mozambique, Angola, 
Tanzania, or Zambia under this section unless the President deter- 
mines and reports to the Congress that such assistance would further 
the foreign policy interests of the United States. None of the 
funds, however, may be used for guerrilla, military, or paramilitary 
activities in any country (Section 533(c), and no security 
supporting assistance may be provided to Uganda, Cuba, Cambodia, 
Laos, the Socialist Republic of Vietnam, Chile, or to Argentina 
after September 30, 1978 (see pp. 19-23). This form of assistance 
may be provided to no more than twelve countries in any fiscal 
year (Section 531). 

Before obligating the funds authorized by this section, the 
President is required to notify the Congress with respect to the 
specific projects and programs for which the funds will be used. 
However, funds made available for Security Supporting Assistance 
shall not be obligated for activities, programs, projects, type 



no 



of material assistance, countries, or other operations not justified 
or in excess of the amount justified unless the Appropriations 
Committees of both Houses of Congress are previously notified 
fifteen days in advance (Foreign Assistance Appropriations Act, 
1978, last unnumbered paragraph under "Economic Assistance"). 

C. MIDDLE EAST SPECIAL REQUIREMENTS FUND 

The Middle East Special Requirements Fund is a contingency 
fund designed to allow the United States to have the economic 
resources immediately available to respond to opportunities to 
move all parties in the region toward a negotiated settlement 
and away from further military adventures that could jeopardize 
peace and disrupt the international economy. Section 901 of the 
Foreign Assistance Act states that "the United States can and 
should play a constructive role in securing a just and durable 
peace in the Middle East by facilitating increased understanding 
between the Arab nations and Israel, and by assisting the nations 
in the area in their efforts to achieve economic progress and 
political stability, which are the essential foundations for 
a just and durable peace." 

This fund was initially used to establish and operate the 
U.S. Sinai Support Mission, a civilian early warning system in 
the Sinai to monitor compliance with the terms for the September 
1975 Egypt-Israel Disengagement Agreement. Funds for that purpose, 



Ill 



however, were shifted to the Security Supporting Assistance program 
by the Foreign Assistance Appropriations Act of 1978 (P.L. 95-148). 

D. OTHER PROGRAMS 

In addition to the programs already discussed, the Senate 
Foreign Relations Connnittee, in its report on the International 
Security Assistance Act of 1977, identified two other programs 
under the broad category of security assistance, since they are 
"provided to meet legitimate U.S. national security interests 
rather than to fulfill an obligation to the world's poor." 

The first of these programs consists of an authorization 
for a $300 million loan to provide balance of payments assistance 
to Portugal "in recognition of the established interest of the 
United States in fostering a democratic government in Portugal, 
in maintaining the strength of the North Atlantic Treaty Organiza- 
tion alliance, and in supporting European economic recovery" 
(Section 497, FAA) . The loan is to be at market rates with repay- 
ment within ten years. 

The second program listed is the International Narcotics 
Control Program. More than half of the funds provided for this 
program ($39 million authorized and $37.1 million appropriated 
in FY 1978) are used for grants of quasi-military equipment for 
use in the drug control effort, according to the Senate report. 



J_/ U.S. Congress, Senate, Committee on Foreign Relations, 
The International Security Assistance and Arms Export Control Act 
of 1977, Report to Accompany S. 1160, 95th Congress, 1st Session, 
May 16, 1977, Senate Report No. 95-195, p. 6. 



I 



VII I. CONGRESSIONAL INTEREST 

The transfer of arms and military equipment, either by grant 
or sale, has been an important and flexible instrument of U.S. 
foreign policy since the end of World War II. At their incep- 
tion during the early days of the cold war, these programs were 
seen by American policymakers as practical and beneficial means 
of supporting U.S. diplomatic and security interests. Supplying 
weapons to our allies, close friends, or potential friends multiplied 
the military strength of the "free world" while allowing the United 
States to maintain small conventional forces and rely on its 
strategic nuclear capability to provide an umbrella of protection 
over those nations. Thus, American policy was implemented through 
Truman Doctrine aid programs, the Marshall Plan, and a series 
of collective defense treaties (NATO, SEATO, etc.) after World 
War II. 

However, U.S. arms transfers programs have expanded and 
changed through the years. As the nations of Western Europe 
completed their recovery, and as the original rationale for grant 
military aid receded, that program was reduced and largely replaced 
by an extensive program of arms sales based on different rationale 
and serving different American foreign policy, economic, and security 
interests. To a degree, that change was mandated by the 
Congress. Section 505(c) of the Foreign Assistance Act requires 

(112) 



113 



the President to reduce and terminate, as relevant conditions 
permit, grant aid to countries having sufficient wealth to enable 
them, in the judgement of the President, to maintain and equip 
their own military forces without undue burden. Section 620(m) 
of that Act prohibits the furnishing of assistance on a grant 
basis to any economically developed country capable of sustaining 
its own defense burden and economic growth. And in 1976, Congress 
amended the Foreign Assistance Act to terminate the military 
assistance program after September 30, 1977, except to the extent 
such aid might be subsequently authorized for specific countries 
in specific amounts (Section 516). 

As the Foreign Military Sales program grew, however, the 
Congress found that its controls over this program were diminished. 
It was also felt that this program was conducted by the administra- 
tion without adequate policy control and for less justifiable 
and less well-thought-out political and economic purposes. 

In attempting to gain greater control over and a greater 
voice in this program, the Congress, in 1974, enacted Section 36(b) 
of the Foreign Military Sales Act (later changed to the Arms Export 
Control Act). This provided for a Congressional veto over 
individual arms sales. This control, however, also appeared to 
be inadequate. In its report on the International Security 
Assistance Act of 1977, the Senate Foreign Relations Committee 



114 



noted continuing problems in the Congressional exercise of its 

policy-formation and oversight responsibilities concerning arms 

sales : 

At present, the Congress is informed of individual 
sales on a piece meal basis throughout the course of 
the year. Congressional sanctions, ultimately, are 
limited to disapproval of individual sales decisions 
under the existing procedure, after it receives 
notification of Executive Branch sales decisions. 
Currently, the Congress is compelled to make its 
decisions on the basis of information provided about 
individual sales decisions and without the framework 
of an integrated plan and rationale in which to judge 
the broader significance and potential ramifications 
of the sale under consideration. Moreover, it appears 
that the Executive Branch makes its sales decisions on 
a piece meal basis and without an overall plan based 
on integrated policy decisions, y 

The House International Relations Committee voiced similar 



concerns 



Arms transfers cannot become an automatic, unregulated 
process. Each case must be carefully judged on its 
own merits. Approval could come only after application 
of a set of criteria designed to insure that a grant 
or sale of defense articles will be in the national 
interest of the United States ... .Too often in the 
past decisions have been made with respect to security 
assistance without the knowledge or concurrence of 
the Congress. Because of the importance which arms 
transfers have for our own national security, such decisions 
should be understood by, and have the support of, the 
Congress and the American people. 2/ 



1/ Senate Report to Accompany S. 1160, Report No. 95-195 
op . cTt . , p. 12. 

2/ U.S. Congress, House of Representatives, Committee on 
International Relations, International Security Assistance and 
Arms Export Control Act of 1976, Report on H.R. 13680, Report 
No. 94-1144, May 14, 1976, pp. 12-13. 



115 



The frustrations of the Congress over the lack of success 

of congressional efforts to gain greater control over arms sales 

policies were further voiced by Senator Frank Church: 

We also wrote into the law a veto so that we would 
have some say in matters involving billions of dollars 
of arms sales to the Middle East with which we're 
refueling a new war. Yet we discovered that this was 
awkward, too, for when we came around to considering 
a veto, it was too late. We were told that the exercise 
of the veto power would create a grievious embarrass- 
ment, a serious diplomatic crisis, because everything 
had been settled between the governments concerned 
by the time it got to the committee. l_/ 

Congress has attempted to gain greater control over arms 

transfers as well as a voice in national policies involving the 

transfer of arms through recent legislation. This was the major 

focus of congressional action on security assistance and arms 

sales programs in 1976. The International Security Assistance 

and Arms Export Control Act of 1976 as orignally enacted imposed 

an annual ceiling on U.S. arms sales and increased congressional 

controls over that program. These provisions led to a Presidential 

veto of the bill. A subsequent combined authorization bill for 

Fiscal Years 1976 and 1977, (P.L. 94-329) eliminated many of the 



1/ U.S. Congress, Senate, Committee on Foreign Relations. 
Meeting with President -Elect Carter, 94th Congress, Transition 
Period, November 23, 1976, p. 9. 

2^/ U.S. Congress. House. Committee on International 
Relations. Congress and Foreign Policy-1976. May 22, 1977. 
pp. 7-10, 93-99. 



23-874 O - 78 - 9 



116 



features found objectionable by the President, but retained important 
new controls over U.S. arms sales programs. 

That Act, as finally approved, overhauled the statutory 
framework governing the arms sales program and mandated specific 
Congressional authorization on a country-by-country basis for 
the military assistance program. 

In commenting on that Act, the Committee on International 

Relations of the House of Representative stated: 

Many of the policy provisions of [the bill] .. .reflect 
the Committee's strong desire to provide for increased 
congressional participation in the formulation of U.S. 
military assistance and sales policies and programs. \_l 

For its part, the Senate Foreign Relations Committee commented 

on these procedures as follows: 

The Arms Export Control Act provides for a significant 
congressional role in these matters and the Committee 
wishes ... to put the Executive Branch on notice 
that it fully intends to exarcise its responsibilities 
in a forceful and responsive way. 2/ 

To some extent, the procedures established in P.L. 94-329, 

combined with greater Administration sensitivity to the desires 

of Congress to be consulted in the formulation of arms sales 



\_l House Report No. 94-1144, op. cit., p. 11. 

2J U.S. Congress, Senate, Committee on Foreign Relations, 
Sale of Missiles to Saudi Arabia, Report to Accompany S. Con. 
Res. 161, 94th Congress, 2d Session, Report No. 94-1305, 
September 24, 1976. 



117 



policies and in the conduct of the foreign military sales program, 

were successful in achieving greater Congressional control over the 

program. 

In its report on the International Security Assistance Act 

of 1977, the Senate Foreign Relations Committee indicated that 

the major purpose of the 1976 act, that of bringing about more 

effective control over arms sales within the Executive Branch 

while providing Congress with a stronger voice in arms exports, 

was well on the way to being achieved. Specifically, the 

Committee saw the following substantial developments during 

the year toward achieving a coordinated and coherent program 

of arms sales by the United States: 

After one year, the Committee is pleased to report 
that the goal of the 1976 Act is well on the way to 
being achieved. The Executive and Legislative Branches 
are moving in substantial ways under the Act toward 
a coordinated, coherent program of arms sales and 
transfers. Specifically: The focus is shifting to 
arms control rather than promotion of arms sales; 
the Congressional role in the process has sharply 
increased through a higher level of direct and early 
participation in the process and more detailed over- 
sight; more information on the process, content and 
purpose of arms exports is available to the public; 
and the widespread direct involvement of the U.S. 
military establishment in arms exports has been 
checked and reversed. 1/ 



1/ Senate Report No. 95-195, op. cit., p. 10. 



118 



The House International Relations Committee, in its report on 

security assistance authorizations for Fiscal Year 1978, similarly 

indicated : 

The policy provisions of (the bill) reflect the inten- 
tion of the committee to adhere to and extend the reforms 
enacted last year. ... These reforms were called for by 
the erosion of public support in this country for 
military assistance programs to foreign nations and 
increasing concern over the rapid growth of the U.S. 
arms exports around the world. \J 

"What is needed now and in the period ahead," stated Senator 

Humphrey, chairman of the Subcoiranittee on Foreign Assistance: 

. . . is a continued joint Legislative-Executive Branch 
effort to improve upon the execution of the existing 
provisions of law, to make them more effective in achieving 
the statutory goals of an arms export control policy 
that contributes to both the cause of peace and stability 
and our own national security. ^/ 

President Carter's announcement of his administration's policy 

on restraint in the transfer of U.S. arms abroad, which was followed 

by subsequent decisions to sell or to consider selling substantial 

quantities of defense supplies and equipment to many nations, led 

to renewed skepticism concerning the effectiveness of the announced 

policy as an effective means of restricting U.S. arms transfers 

as an instrument of U.S. national security policy. Senator Humphrey, 

for one, stated his concern over the apparent inconsistency between 



y U.S. Congress. House. Committee on International Relations 
International Security Assistance Act of 1977. Report on H.R, 6884, 
95th Congress, ls»: Session, May 9, 1977. Report No. 95-274. p. 8. 

2/ Senate Report No. 95-195, op. cit., pp. 11-12. 



119 



the President's announced policy and the actions which had taken 

place subsequent to the promulgation of that policy. "As the current 

backlog of previously negotiated arms sales diminishes," he stated, 

"the Subcommittee [on Foreign Assistance], in its oversight role, 

will review each proposed sale with the President's May 19 policy 

statement in mind." 

Similarly, the Senate Foreign Relations Committee saw much 

that remained to be done: 

There are presently $32 billion in approved sales orders 
in the pipeline; $9 billion in sales are planned for fiscal 
year 1978 alone. The United States is not a lone actor 
in this field. U.S. national security interests and those 
of its friends and allies must be carefully weighed even 
as the U.S. seeks to reduce and restrain the trade in 
arms. The Committee intends to continue its close scrutiny 
of arms exports and to work constructively to control this 
activity. V 

In the House of Representatives as well, concern continued to 
be expressed as to congressional oversight of U.S. arms sales 
programs. Representative Lee H. Hamilton, chairman of the Sub- 
committee on Europe and the Middle East of the Committee on Inter- 
national Relations, expressed his concern over the level U.S. aid and 
sales to Israel and the nations of the Middle East and Persian Gulf. 



\_/ U.S. Congress. Senate. Committee on Foreign Relations. 
Implications of President Carter's Conventional Arms Transfer Policy 
Report by the Subcommittee on Foreign Assistance. December 1977. 
95th Congress, 1st Sess., Committee Print. p. iii. 

2/ Senate Report No. 95-195, op. cit., p. 10. 



120 



In considering the Fiscal Year 1978 foreign aid authorization bill, 
unsuccessful attempts were made within the International Relations 
Committee and on the floor of the House to cut military assistance 
and credit sales by 10% across the board. 

On October 7, 1977, in a statement on the floor. Senate Majority 
leader Robert C. Byrd further raised questions concerning "the 
appropriate role of the Congress in the arms sales process." Senator 
Byrd indicated that present procedures, which presented the Congress 
with "essentially a take-it-or-leave-it proposition" concerning 
individual arras sales, with "no real opportunity for compromise . . . 
[and] no direct means for Congress to attach reservations or conditions 
to a proposed sale," were inadequate. 

Indicating that results from the implementation of the President's 
arms sales policy had been disappointing, the Majority Leader 
stated, "Congress, with its oversight responsibility in this area, 
has an obligation to help develop appropriate guidelines and procedures 
for arms sales." The Majority Leader, in his statement, then outlined 
procedures which he believed should be instituted "to insure that 
the Senate does exercise its proper role." 

Among his recommendations were the following: 

First. The executive branch should submit a detailed 

overall plan for arms sales for each fiscal year early 

in the congressional session.... 

Second. Congress should .. .extend the period for 

congressional review of major arms sales. 

Third. As a general rule, the executive should not 

submit notifications of proposed sales during extended 



121 



congressional nonlegislative periods. . . . 
Fourth. The cumulative and long-terra impact of arms 
sales must be given more thorough consideration. . . , 
Fifth. Consideration should be given to requiring 
explicit congressional approval — rather than a resolu- 
tion of disapproval — for major arms sales.... 
Sixth. Finally, in the case of Iran, ...I would suggest 
a moratorium on further sales in the near future .... 1/ 

The President's announcement, on February 1, 1978, of an 
arms transfer ceiling of $8.6 billion for Fiscal Year 1978 for those 
items and countries covered by his arms transfer policy, followed 
by a White House announcement the same day that total sales for 
Fiscal Year 1978 were projected to rise above $13 billion, some $2 
billion over the Fiscal Year 1977 total, added to congressional 
skepticism concerning the effectiveness of the Administration's 
arms sales policy. Additional skepticism was generated by the 
announcement on February 14, 1978 of the Administration's intention 
to sell $4.8 billion in jet aircraft to Israel Egypt, and Saudia 
Arabia. 

In many ways', Congress has been pleased with its increasing 
control over U.S. arms sales policy and with the willingness of the 
Administration to seek restraint in these sales and to consult with 
the Congress. In hearings on the security assistance bill in 1977, 
Senator Humphrey indicated to administration witnesses, "I appreciate 
very, very much the cooperation you have given this committee. I 
think we were able to work out many of our difficulties and differences 
of opinion." 



y Congressional Record (daily edition), October 7, 1977 
pp. 816619-21. 



122 



But the greatest remaining problem, as seen from a widely 
voiced congressional perspective, remains the fact that Congress 
receives notification only of proposed individual sales and then 
only after significant negotiation has been conducted with the 
perspective purchaser. Cancellation — or even major modification — of 
a negotiated sale at that point entails possible damage to U.S. 
relationships with the purchasing country. The twenty-day prenotifica- 
tion agreement was originally designed to afford Congress some time 
in which to make its views on any particular sale known to the Adminis- 
tration prior to having sales negotiations reach a point of U.S. 
commitment. But each of these prenotif ications has been invariably 
followed by a formal notification subsequent to the twenty day period, 
thus limiting the degree of congressional influence possible. 

Similarly, the fact that arras sales notifications to the Congress 
are made on a piecemeal, one at a time, basis precludes the possibility 
of prior congressional review of the entire program on an annual 
basis. To meet this deficiency, Senator Javits in 1977 proposed 
an amendment to the Arms Export Control Act which would have required 
the Executive Branch, in its annual presentation to the Congress, 
to identify for each foreign country the total aggregate dollar 
value of sales it intended to make that year and to identify the 
major defense equipment intended to be sold. By requiring the 
presentation of arms sales plans in this overall format, the amend- 
ment was designed to enable the Congress to exercise its policy- 
formation and (wersiglit responsibilities in a coherent and deliberate 
manner . 



123 



Senator Humphrey, the Subcommittee chairman, stated that "the 
purpose of this amendment is fully within the purpose and statement 
of objectives of that particular piece of legislation." However, 
he requested that the amendment be withdrawn in view of the Committee's 
decision to "note in precise language. . . the desire of the full 
Connnittee to have the cooperation of the Administration in the fulfill- 
ment of the directives of this amendment." Accordingly, the amendment 
was withdrawn. 

Thus, in the future, regardless of the effectiveness of President 
Carter's arms transfer policy, it is likely that the Congress will 
seek, either by working with the Administration, or through legisla- 
tion, to provide an opportunity for annual congressional review 
of the entire arms sales program and of specific sales on a more 
complete and timely basis in order to allow for increased congressional 
participation in the formulation of policy concerning U.S. arms 
transfer and security assistance programs. 



1/ Senate Report No. 95-195, op. cit., pp. 11-12, 



APPENDIX I 

Conventional Arms Transfer Policy Statement by the 

President 

The White House, 

May 19, 1977. 

The virtually unrestrained spread of conventional weaponry threatens stability 
in every region of the world. Total arms sales in recent years have risen to over 
$20 billion, and the United States accounts for more than one half of this amount. 
Each year, the weapons transferred are not only more numerous, but also more 
sophisticated and deadly. Because of the threat to world peace embodied in this 
spiralling arms traffic, and because of the special responsibilities we bear as the 
largest arms seller, I believe that the United States must take steps to restrain 
its arms transfers. 

Therefore, shortly after my Inauguration, I directed a comprehensive review 
of U.S. conventional arms transfer policy, including all military, poHtical, and 
economic factors. After reviewing the results of this study, and discussing those 
results with members of Congress and foreign leaders, I have concluded that 
the United States will henceforth view arms transfers as an exceptional foreign 
policy implement, to be used only in instances where it can be clearly demon- 
strated that the transfer contributes to our national security interests. We will 
continue to utilize arms transfers to promote our security and the security of 
our close friends. But, in the future, the burden of persuasion will be on those 
who favor a particular arms sale, rather than whose who oppose it. 

To implement a policy of arms restraint, I am establishing the following set 
of controls, applicable to all transfers except those to countries with which we 
have major defense treaties (NATO, Japan, Australia, and New Zealand). W^e 
will remain faithful to our treaty obligations, and will honor our historic responsi- 
bilities to assure the security of the state of Israel. These controls will be binding 
unless extraordinary circumstances necessitate a Presidential exception, or where 
I determine that countries friendly to the United States must depend on advanced 
weaponry to offset quantitative and other disadvantages in order to maintain 
regional balance. 

1. The dollar volume (in constant FY 1976 dollars) of new commitments under 
the Foreign Military Sales and Military Assistance Programs for weapons and 
weapons-related items in FY 1978 will be reduced from the FY 1977 total. Trans- 
fers which can clearly be classified as services are not covered, nor are commercial 
sales, which the U.S. Government monitors through the issuance of export 
licenses. Commercial sales are already significantly restrained by existing legisla- 
tion and Executive Branch policy. 

2. The United States will not be the first supplier to introduce into a region 
newly-developed, advanced weapons systems which would create a new or signifi- 
cantly higher combat capability. Also, any commitment for sale or coproduction 
of such weapons is prohibited until they are operationally deployed with U.S. 
forces, thus removing the incentive to promote foreign sales in an effort to lower 
unit costs for Defense Department procurement. 

3. Development or significant modification of advanced weapons systems solely 
for export will not be permitted. 

4. Coproduction agreements for significant weapons, equipment, and major 
components (beyond assembly of subcomponents and the fabrication of high- 
turnover spare parts) are prohibited. A limited class of items will be considered for 
coproduction arrangements, but with restrictions on third-country exports, since 
these arrangements are intended primarily for the coproducer's requirements. 

5. In addition to existing requirements of the law, the United States, as a 
condition of sale for certain weapons, equipment, or major components, may 
stipulate that we will not entertain any requests for retransfers. By establishing 

(125) 



106 

at the outset that the United States will not entertain such requests, we can 
avoid unnecessary bilateral friction caused by later denials. 

6. An amendment to the International Traffic in Arms Regulations will be 
issued, requiring policy level authorization by the Department of State for 
actions by agents of the United States or private manufacturers which might 
promote the sale of arms abroad. In addition, embassies and military representa- 
tives abroad will not promote the sale of arms and the Secretary of Defense will 
continue his review of government procedures, particularly procurement regula- 
tions, which may provide incentives for foreign sales. 

In formulating security assistance programs consistent with these controls, we 
will continue our efforts to promote and advance respect for human rights in 
recipient countries. Also, we will assess the economic impact of arms transfers to 
those less-developed countries receiving U.S. economic assistance. 

I am initiating this poUcy of restraint in the full understanding that actual 
reductions in the worldwide traffic in arms will require multilateral cooperation. 
Because we dominate the world market to such a degree, I believe that the 
United States can, and should, take the first step. However, in the immediate 
future, the United States will meet with other arms suppliers, including the 
Soviet Union, to begin discussions of possible measures for multilateral action. 
In addition, we will do whatever we can to encourage regional agreements among 
purchasers to limit arms imports. 



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— 1-^ CEXUCUUI.— 31 



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.— «»«» en — mu>^r^cj.— voi— poI 

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Ship 

COCONINO LST-603 
TAYLOR DD-468 
WALKER DD-517 
COGSWELL DD-651 
BOYD DD-544 
RUCHAMPKIN LPR-89 
CADO PARISH LST-515 
HICKMAN CITY LST-825 
MADIERA CITY LST-905 
PRESTON DD-795 
S.N. MOORE DD-747 
BRISTOL DD-857 
BRUSH DD-745 
BARBER LPR-57 
PRICHETT DD-561 
LUZERN CITY LST-902 
HAWKBILL SS-366 
STONE CITY LST-1141 
JEROME CITY LST-848 

BULLOCH CITY 
WAYNESWORTH DD-700 
CREENLET ASR-10 
GUNSTON HALL LSD-5 
ELLYSON DD-5A5 





APPENDIX IX* 










SHIP TRANSFERS 








Country 


Authority* 


Date 


Remarks 


Vietnam 


Lease 


Jul 


69 




Italy 


FMS 


Jul 


69 




Italy 


FMS 


Jul 


69 




Turkey 


FMS 


Nov 


69 




Turkey 


FMS 


Nov 


69 




Colombia 


Lease 


Nov 


69 




Philippines 


Lease 


Nov 


69 




Philippines 


Lease 


Nov 


69 




Philippines 


Lease 


Nov 


69 




Turkey 


FMS 


Nov 


69 




Rep of China 


FMS 


Dec 


69 




Rep of China 


FMS 


Dec 


69 




Rep of China 


FMS 


Dec 
Dec 


69 
69 




Mexico 


FMS 




Italy 


FMS 


Jan 


70 




Thailand 


Lease 


Jan 


70 




Netherlands 


FMS 


Feb 


70 




Thailand 


Lease 


Mar 


70 




Vietnam 


Lease 


Apr 


70 


Sold FMS to 
Philippines Apr 76 


Vietnam 


Lease 


Apr 


70 




Rep of China 


FMS 


May 


70 




Turkey 


Lease 


Jun 


70 


Sold FMS Feb 73 


Argentina 


FMS 


Jun 


70 




Rep of China 


FMS 


Jul 


70 





Source: Department of the Navy, OP-631 

(ir>2) 



153 



Ship 


Country 


MACOMB DD 458 


Rep of China 


CLARKE CITY LSI 601 


Indonesia 


IREDELL CITY LST 839 


Indonesia 


ENGLISH DD-696 


Rep of China 


DAVIS T-AGOR 5 


New Zealand 


HARNETT CITY LST 821 


Vietnam 


RAZOBRACK SS-394 


Turkey 


SEAFOX SS-402 


Turkey 


FORT MANDAN LSD- 21 


Greece 


FRANK KNOX DD742 


Greece 


CAMP DER-251 


Vietnam 


MINGO SS-261 


Japan 


TIDEWATER AD-31 


Indonesia 


PACE CITY LST-1076 


Greece 


GAINARD DD-706 


Iran 


ZELLARDS DD-777 


Iran 


FOREST ROYAL DD-872 


Turkey 


HARRISON DD-573 


Mexico 


ROGERS DD-574 


Mexico 


JACANA MSC-193 


Indonesia 


MEADOWLARK MSC-196 


Indonesia 


SMALL DD-838 


Rep of China 


OUTAGAMIE CITY LST 


Brazil 


1073 





Authority * 

FMS 

Lease 

Lease 

FMS 

Lease 

Lease 

FMS 

FMS 

Lease 

FMS 

Loan, 
PL91-682 

FMS 

Lease 

Lease 

FMS 

FMS 

Loan, 
PL91-682 

FMS 

FMS 

Lease 

Lease 

FMS 
Lease 



Date 
Jul 70 
Jul 70 
Jul 70 
Sep 70 
Jul 70 



Oct 70 Sold FMS to Philippines 
Apr 76 



Nov 70 




Dec 70 




Jan 71 




Jan 71 




Feb 71 


Sold FMS to Philippines 




Apr 76 


Feb 71 




Feb 71 




Mar 71 




Mar 71 




Mar 71 




Mar 71 


Sold FMS Feb 73 


Apr 71 




Apr 71 





Apr 71 Scrap disposal 
sale Oct 76 

Apr 71 Scrap disposal 
sale Oct 76 

Apr 71 

Apr 71 Sold FMS Dec 73 



154 



Ship 


Country 


Author 


GARRETT CITY LST-786 


Vietnam 


Lease 


WINDSOR ARD-22 


Rep of China 


Lease 


FALCON MSC-190 


Indonesia 


Lease 


LIMPKIN MSC-195 


Indonesia 


Lease 


POMFRET SS-391 


Turkey 


Loan 


THORNBACK SS-481 


Turkey 


Loan 


SAN MARCOS LSD-25 


Spain 


Lease 


DYNAMIC MSO-432 


Spain 


Lease 


PIVOT MSO-463 


Spain 


Lease 


PERSISTENT MSO-491 


Spain 


Lease 


RONQUIL SS-396 


Spain 


FMS 


HOLMES CITY LST-836 


Singapore 


Lease 


HUNTERDON CITY AGP-838 


Malaysia 


Lease 


MAHOPAC ATA-196 


Rep of China 


Lease 


UMPQUA ATA-209 


Colombia 


Lease 


KALMIA ATA- 184 


Colombia 


Lease 


MARK AKL-12 


Rep of China 


Lease 


ARIKARA ATF-98 


Chile 


Lease 


CATFISH SS-339 


Argentina 


FMS 


CHIVO SS-341 


Argentina 


FMS 


HUMMINGBIRD MSC-192 


Indonesia 


Lease 


INGRAHAM DD-694 


Greece 


FMS 


FRIGATEBRID MSC-191 


Indonesia 


Lease 



TILLAMOOK ATA-192 



Korea 



Lease 



Date 

Feb 7 

Jun 7 

Jun 7 

Jun 7 

Jul 7 

Jul 7 

Jul 7 

Jul 7 

Jul 7 

Jul 7 

Jul 7 

Jul 7 

Jul 7 

Jul 7 

Jul 7 

Jul 7 

Jul 7 

Jul 7 

Jul 7 

Jul 7 

Jul 7 

Jul 7 

Jul 7 

Aug 7 



Remarks 

Sold FMS to 
Philippines Apr 76 



Scrap disposal 
sale Oct 76 

Scrap disposal 
sale Oct 76 

Sold FMS Aug 73 

Sold FMS Aug 73 



Sold FMS Dec 75 



Sold FMS May 76 



Sold FMS May 76 



Scrap disposal 
sale Oct 76 



155 



Ship 


Country 


Authority* 


Unte 


BM«rks 


TWINING DD-540 


Rep of China 


FMS 


Aug 






BRAINE DD-630 


Argentina 


FMS 


Aug 






COWELL DD-547 


Argentina 


FMS 


Aug 






ASKARI ARL-30 


Indonesia 


Loan, FAA 


Sep 






LAMPREY SS-372 


Argentina 


FMS 


Sep 




Previously on 
loan 


MACABI SS-375 


Argentina 


FMS 


Sep 




I Previously on 

loan 


UTINA ATF-163 


Venezuela 


Lease 


Sep 






PARK CITY LST-1077 


Mexico 


Lease 


Sep 






FORSTER DER-334 


Vietnam 


Loan, PL 
91-682 


Sep 






SATYR ARL-23 


Vietnam 


Lease 


Sep 




I Sold FMS to 

Philippines Jan 77 


AI1PHI0N AR-12 


Iran 


Lease 


Oct 




I Sold FMS Mar 77 


MULLANY DD-528 


Rep of China 


FMS 


Oct 






ICEFISH SS-367 


Netherlands 


FMS 


Oct 






BENICIA PG-96 


Korea 


Lease 


Oct 






GWIN MMD-33 


Turkey 


FMS 


Oct 






WEXFORD CITY LST 1168 


Spain 


Loan, FAA 


Oct 






TERREBONNE PARISH 


Spain 


Loan, FAA 


Oct 






LST-1165 












KRISHNA ARL-38 


Philippines 


Lease 


Nov 






BRULE AKL-28 


Korea 


Lease 


Nov 




Sold FMS Nov 74 


PF-107 


Thailand 


FMS 


Nov 






ARCO ARD-29 


Iran 


Lease 


Nov 




Sold FMS Mar 77 


GIBBS T-AGOR 1 


Greece 


Lease 


Dec 




Sold FMS May 77 



156 



HARWOOD DD-861 

CUBERA SS-347 

TOM GREEN CTY 
LST-1159 

KELLAR AGS- 2 5 

GUITARRP SS-36 3 

HAMMERHEAD SS-36 4 

SAGAMORE ATA- 20 8 

SALISH ATA-187 

CATAWBA ATA- 2 10 

STORMES DD-7 80 

TUTUILA ARG-4 

KUKUI WAK-186 

KEATHLEY AGS- 35 

VIGOR MSO-47 3 

CAHOKIA ATA- 186 ^ 

GRAMPUS SS-523 

CLEARWATER CTY 
LST-602 

ANTHONY DD-515 

LCU 1491 

LCU 1471 

CAIMAN SS-323 

TRUTTA SS-421 

KEPPLER DD-765 

CHEVALIER DD-805 



Country Authority ^ 



Date 



Remarks 



Turkey 

Venezuela 
Spain 



Loan, PL Dec 71 Sold FMS Feb 73 
91-682 TIAS 7206 



FMS 

Loan, FAA 



Portugal Loan, FAA 
Turkey FMS 
Turkey FMS 
DOMREP Lease 
Argentina Lease 
Argentina Lease 
Iran FMS 
Rep of China FMS 
Philippines Lease 
Rep of China Lease 
Spain Lease 
Rep of China Lease 
Brazil FMS 
Mexico FMS 

Germany FMS 

Spain Lease 

Spain Lease 

Turkey FMS 

Turkey FMS 

Turkey FMS 
Korea Loan PL92-270 



Jan 72 
Jan 72 

Jan 72 

Jan 72 

Jan 72 

Feb 72 

Feb 72 

Feb 72 

Feb 72 

Feb 72 

Feb 72 

Mar 72 

Apr 72 Sold FMS Aug 74 

APR 72 Sold FMS May 76 

May 72 

May 72 

Jun 72 

Jun 72 Sold FMS Aug 76 

Jun 72 Sold FMS Aug 76 

Jun 72 

Jul 72 

Jul 72 

Jul 72 



157 



Ship 
HUGH PURVIS DD-709 Turkey 

ELKHORN AOG-7 

STICKELL DD-888 

WILLARD KEITH DD-775 

SHIELDS DD-596 

BORIE DD-704 
HANK DD-762 

GENESSE AOG-8 
ENERGY MSO-436 
FIRM MSO-444 
MADDOX DD-731 
TOMBIGBEE AOG^ll 
ODAX SS-48i| 
HARTLEY DE-1029 
BEATTY DD-756 
LST-5^6 
LST-i|88 
LST-222 

DESOTO CTY LST-1171 
YORK CTY LST-1175 
HARDHEAD SS-365 
DEALEY DE-1006 
DOGFISH SS-350 



Country 


Authority* 


Date 


Turkey 


Loan PL 
92-270 


Jul 7? 


Rep of China 


Lease 


Jul 72 


Greece 


FMS 


Jul 72 


Colombia 


FMS 


Jul 72 


Brazil;' 


FMS 


Jul 72 


Argentina 
Argentina 
Chile 


FMS 
FMS 
Lease 


Jul 72 
Jul 72 
Jul 72 


Philippines 


Lease 


Jul 72 


Philippines 


Lease 


Jul 72 


Rep of China 


FMS 


Jul 72 


Greece 


Lease 


Jul 72 


Brazil 


FMS 


Jul 72 


Colombia 


FMS 


Jul 72 


Venezuela 


FMS 


Jul 72 


Philippines 


Lease 


Jul 72 


Philippines 


Lease 


Jul 72 


Philippines 


Lease 


Jul 72 


Italy 


Lease 


Jul 72 


Italy 


Lease 


Jul 72 


Greece 


FMS 


Jul 72 


Uruguay 


FMS 


Jul 72 


Brazil 


FMS 


Jul 72 



Remarks 



158 



Ship 


Country 


Authority* 


Date 


Remarks 


ENTEMEDOR SS340 


Turkey 


Loan, PL 
92-270 TIAS 


Jul 
7407 


72 


Sold FMS Aug 73 


HYDRO SOUND BOAT 
#C30411 


Iceland 


Lease 


Aug 


72 




PICKEREL SS-524 


Italy 


Loan, PL 
92-270 


Aug 


72 




VOLADOR SS-490 


Italy 


Loan, PL 
92-270 


Aug 


72 




THREADFIN SS-410 


Turkey 


Loan, PL 
92-270 


Aug 


72 


Sold FMS Aua 7 3 


FURSE DD-8fl2 


Spain 


Loan PL 
92-270 


Aug 


72 




E.A. GREENE DD-711 


Spain 


Loan PL 
92-270- 


Aug 


72 




SPRINGER SS-414 


Chile 


FMS 


Sep 


72 


Previously on 
loan 


AFDL-28 


Mexico 


Lease 


Sep 


72 




MSF-105 


Mexico 


FMS 


Sep 


72 




MSF-123 


Mexico 


FMS 


Sep 


72 




MSF-314 


Mexico 


FMS 


Sep 


72 




MSF-316 


Mexico 


FMS 


Sep 


72 




MSF-317 


Mexico 


FMS 


Sep 


72 




MSF-318 


Mexico 


FMS 


Sep 


72 




MSF-319 


Mexico 


FMS 


Sep 


72 




MSF-322 


Mexico 


FMS 


Sep 


72 




MSF-340 


Mexico 


FMS 


Sep 


72 




MSF-381 


Mexico 


FMS 


Sep 


72 




COMPTON DD-70 5 


Brazil 


FMS 


Sep 


72 





159 



Shi£ 

BANG SS-385 
PICUDA SS-382 



Country Authority * Date Remarks 



Spain Loan, PL 
92-270 

Spain Loan, PL 
92-270 



Oct 72 Sold FMS Nov 74 
Oct 72 Sold FMS Nov 74 



YTM-767 


Greece 


Lease 


Oct 


72 




SANDLANCE SS-381 


Brazil 


FMS 


Oct 


72 


Previously 
on loan 


LCM-6 #36824 


Uruguay 


Lease 


Oct 


72 




LCM-6 #6551 


Uruguay 


Lease 


Oct 


72 




LLOYD THOMAS DD-76 4 


Rep of Chi] 


aa FMS 


Oct 


72 




KIOWA ATF-72 


DOM REP 


Lease 


Oct 


72 




E.F. LARSON DD-830 


Korea 


Loan, PL 
92-270 


Oct 


72 


Sold FMS Jan 77 


SIOUX ATF-75 


Turkey 


Lease 


Oct 


72 


Sold, FMS 
Aug 73 


APL-4 7 


Turkey 


Lease 


Dec 


72 




CABOT AVT-3 


Spain 


FMS 


Dec 


72 


Previously 
on loan 


CAPP DD-550 


Soain 


FMS 


Dec 


72 


Previously 
on loan 


D.W. TAYLOR DD-551 


Spain 


FMS 


Dec 


72 


Previously 
on loan 


CONVERSE DD-509 


Spain 


'FMS 


Dec 


72 


Previously 
on loan 


JARVIS DD-799 


Spain 


FMS 


Dec 


72 


Previously 
on loan 


MCGOWAN DD-6 7 8 


Spain 


FMS 


Dec 


72 


Previously 

on loan 


GRANT CTY LST-1174 


Brazil 


Lease 


Jan 


73 




PERKINS DD-877 


Argentina 


FMS 


Jan 


73 





160 



Ship 


Country 


Authority* 


Date 


Remarks 


LST-277 


Chile 


FMS 


Feb 


73 




GREENLET (ASR 10) 


Turkey 


FMS 


Feb 


73 


Prev on lease 


BERGALL SS-320 


Turkey 


FMS 


Feb 


73 


Previously 
on loan 


HUGH PURVIS DD-709) 


Turkey 


FMS 


Feb 


73 


•1 


BRONSON DD-66 8 


Turkey 


FMS 


Feb 


73 


Previously 
on loan 


FORREST ROYAL DD-872 


Turkey 


FMS 


Feb 


73 


" 


VAN VALKENBURG 


1 Turkey 


FMS 


Feb 


73 


Previously 


DD-656 










Dn loan 


HARWOOD DD-861 


Turkey 


FMS 


Feb 


73 


" 


MSF-64 


Mexico 


FMS 


Feb 


73 




MSF-120 


Mexico 


FMS 


Feb 


73 




MSF-124 


Mexico 


FMS 


Feb 


73 




MSF-128 


Mexico 


FMS 


Feb 


73 




MSF-315 


Mexico 


FMS 


Feb 


73 




MSF-379 


Mexico 


FMS 


Feb 


73 




JOHN R. PERRY 


Indonesia 


FMS 


Feb 


73 




DE-1034 












SURPRISE PG-97 


Turkey 


Loan, FAA 


Feb 


73 




SEA LEOPARD SS-483 


Brazil 


FMS 


Mar 


73 




MSF-101 


Mexico 


FMS 


Apr 


73 




MSF-104 


Mexico 


FMS 


Apr 


73 




MSF-111 


Mexico 


FMS 


Apr 


73 




MSF-306 


Mexico 


FMS 


Apr 


73 




IRWIN DD-79 4 


Brazil 


FMS 


Apr 


73 


Previously 
on loan 


HANCOCK DD-675 


Brazil 


FMS 


Apr 


73 


Previously 
on loan 


CUTLASS SS-478 


China 


FMS 


Apr 


73 




HANSON DD-832 


China 


FMS 


Apr 


73 





161 



SHELTON DD-790 
J.E. KYES DD-787 
WARRINGTON DD-843 
GRENADIER SS-525 
WINDHAM CTY LST-1170 
DEFIANCE PG-9 5 
VERNON CTY LST-1161 
SKYLARK ASR-20 
PLAICE SS-39 

TRIGGER SS-564 
RUPERTUS DD-851 

EVERSOLE DD-789 
BUCK DD-761 
J.C.OWENS DD-776 
GUEST DO- 4 72 

BENNETT DD-473 

GUSHING DD-797 



HAILEY DD-556 
SIOUX ATF-75 

MAPIRO SS-376 



Country 


Authority* 


Date 


Remarks 


China 


FMS 




Apr 


73 




China 


EMS 




Apr 


7 3 




China 


FMS 




Apr 


73 




Venezuela 


FMS 




May 


73 




Turkey 


Loan, 


FAA 


Jun 


73 




Turkey 


Loan, 


FAA 


Jun 


7 3 




Venezuela 


Loan, 


FAA 


Jun 


73 




Brazil 


FMS 




Jun 


73 




Brazil 


FMS 




Jul 


73 


Previously 
on loan 


Italy 


FMS 




Jul 


73 




Greece 


Loan, 
92-27(1 


PL 

t 


Jul 


73 




Turkey 


FMS 




Jul 


73 




Brazil 


FMS 




Jul 


73 




Brazil 


FMS 




Jul 


73 




Brazil 

1 


FMS 




Aug 


73 


Previously 
on loan 


Brazil 


FMS 




Aug 


73 


Previously 
on loan 


Brazil 


FMS 




Aug 


73 


Previously 
on loan 


Brazil 


FMS 




Aug 


73 


Prev on loan 


Turkey 


FMS 




Aug 


73 


Prev on loan 


Turkey 


FMS 




Aug 


73 


Previously 
on loan 



162 



Ship 


Country 

Turkey 

Turkey 

Chile 

Turkey 

Chile 

Turkey 

Chile 

Turkey 

Turkey 


Authority* 

FMS 

FMS 
FMS 
FMS 
FMS 
FMS 
FMS 
FMS 
FMS 


Date Remarks 


MERD SS-378 

POMFRET SS-391 
ARD-25 

THORNBACK SS-418 
LST-1066 

ENTEMEDOR SS-340 
LST-1067 

THREADFIN SS-410 
C.H. ROAN DD-853 


Aug 

Aug 
Aug 
Aug 
Aug 
Aug 
Aug 
Aug 
Sep 


73 Previously 

on loan 
73 
73 
73 
73 
73 
73 
73 
73 


HURST DE-250 


Mexico 


FMS 


Oct 


73 


MEGARA ARVA-6. 


Mexico 


FMS 


Oct 


73 


TRUMPETFISH SS-42 5 


Brazil 


FMS 


Oct 


73 


AMBERJACK SS-522 


Brazil 


FMS 


Oct 


73 


TUSK SS-426 \ 


China 


FMS 


Oct 


73 


T.J. GARY DER-326 


Tunisia 


FMS 


Oct 


73 


LOWRY DD-770 


Brazil 


FMS 


Oct 


73 


REMORA SS-487 


Greece 


FMS 


Oct 


73 


WALDRON DD-699 


Colombia 


FMS 


Oct 


73 


STRONG DD-758 


Brazil 


FMS 


Oct 


73 


HUNTINGTON DD-7 81 


Venezuela 


FMS 


Oct 


73 


NOA DD-841 


Spain 


Loan PL 
92-270 


Oct 


73 


LEARY DD-879 


Spain 


Loan PL 
92-270 


Oct 


73 


O'HARE DD-889 


Spain 


Loan PL 
92-270 


Oct 


73 


CORPORAL SS-346 


Turkev 


FMS 


Nov 


73 


COBBLER SS-344 


Turkey 


FMS 


Nov 


73 


TUCKER DD-875 


Brazil 


FMS 


Dec 


73 


OUTGAMIE CTY LST 
1073 


Brazil 


FMS 


Dec 


73 Prev on lease 



163 



Ship \ 


Country 


Authority* 


Date 


Remarks 


BASS DD-887 


Brazil 


FMS 


Dec 


7 3 




ISBELL DD-869 


Greece 


Loan PL 
92-270 


Dec 


73 




LIND DD-703 


Korea 


FMS 


Dec 


73 




DEHAVEN DD-727 


Korea 


FMS 


Dec 


73 




GREENFISH SS-351 


Brazil 


FMS 


Dec 


73 




D.H. FOX DD-779 


Chile 


FMS 


Jan 


74 




SPERRY DD-697 


Chile 


FMS 


Jan 


74 




BENHAM DD-796 


Peru 


FMS 


Jan 


74 


Previously 
on loan 


I SHERWOOD DD-520 


Peru 


FMS 


Jan 


74 


Previously 
on loan 


KIMBERLEY DD-521 


China 


FMS 


Jan 


74 


Previously 
on loan 


YARNALL DD-541 

1 


China 


FMS 

/ 


Jan 


74 


Previously 
on loan 


1 
RILEY DE-579 


China 


FMS 


Jan 


74 


Previously 
on loan 


BERRY DE-1035 . 


Indonesia 


FMS 


Jan 


74 




CADMUS AR-14 


China 


FMS 


Jan 


74 




ELTANIN T-AGOR-8 


Argentina 


Lease 


Feb 


74 




HARDER SS-56 8 


Italy 


FMS 


Feb 


74 




WHITLEY AKA-91 


Italy 


FMS 


Feb 


74 


Previously 
on lease 


RUDDY MSF-380 


Peru 


FMS 


Mar 


74 


Previously 
on loan 


YTL-56 7 


Paraguay 


Loan, FAA 


Aor 


74 




SWENSON DD-72q 


China 


FMS 


May 


74 





23-874 O - 78 - 12 



164 



Ship 


Country 


Authority* 


Date 


Remarks 


TAUSSIG DD-746 


China 


FMS 


May 


74 


Prev on loan 


PINTO ATF-90 


Peru 


FMS 


May 


74 


Prev on loan 


BOLE DD-7 55 


China 


FMS 


May 


74 




SHOVELLER MSF-382 


Peru 


FMS 


May 


74 


Prev on loan 


LOFBERG DD-759 


China 


FMS 


May 


74 




MISSION SANTA CLARA 


Pakistan 


FMS 


May 


74 


Prev on loan 


AO-132 












THOMASON DD-760 


China 


FMS 


May 


74 




THOMAS DD-833 


China 


FMS 


May 


74 




BADGER DD-657 


Chile 


FMS 


May 


74 




MANSFIELD DD-728 


Argentina 


FMS 


Jun 


74 




COLLETT DD-730 


Argentina 


FMS 


June74 




ARD-11 


Mexico 


FMS 


Jun 


74 




JAT.T.AO SS-368 


Spain 


FMS 


Jun 


74 




AFDL 25 


Cambodia 


Loan, FAA 


Jun 


74 




YO-226 


Denmark 


FMS 


Jul 


74 


Prev on loan 


SEA POACHER SS-406 


Peru 


FMS 


Jul 


74 




yo-229 


Denmark 


FMS 


Jul 


74 


Prev on loan 


SANDS T-AGOR-6 


Brazil 


Lease 


Jul 


74 




ATULE SS-403 


Peru 


FMS 


Jul 


74 




NORRIS DD-85^ 


Turkey 


FMS 


Jul 


74 




BAILEY DD-713 


Iran 


FMS 


Jul 


74 


, 


LAVALETTE DD-44 8 


Peru 


FMS 


Jul 


74 




TERRY DD-513 


Peru 


FMS 


Jul 


74 





165 



Ship 


Country 


Authori 


tz* 


Date 




Remarks 




T-LST-117 


Singapore 


FMS 




Jul 


74 






T-LST-276 


Singapore 


FMS 




Jul 


74 






CHASE CTY T-LST-532 


Singapore 


FMS 




Jul 


74 






TONTI AOG-76 


Colombia 


FMS 




Jul 


74 


Prev on 


loan 


WESTCHESTER COUNTY 
LST-1167 


Turkey 


Loan, 


FAA 


Aug 


74 






HUNTERDON COUNTY 
LST-838 


Malaysia 


FMS 




Aug 


74 


Prev on 


loan 


SAN MARCOS LSD- 2 5 


Spain 


FMS 




Aug 


74 


" " 


n 


DYNAMIC MSO-4 32 


Spain 


FMS 




Aug 


74 


" - 


II 


VIGOR MSO 473 


Spain 


FMS 




Aug 


74 


II n 


II 


PIVOT MSO 463 


Spain 


FMS 




Aug 


74 


„ n 


•• 


PERSISTENT MSO 491 


Spain 


FMS 




Aug 


74 


n m 


" 


Admirals Barge 


Turkey 


FMS 




Oct 


74 







Ser 26502 



DUKES COUNTY 
LST-735 



} Rep of China 



FMS 



PLUCKETT DD-431 


Rep of 


China 


FMS 


BENSON DD-421 


Rep of 


China 


FMS 


JONES DD-427 


Rep of 


China 


FMS 


SHARPS AKL-10 


Korea 




FMS 


BRULE AKL-28 


Korea 




FMS 


AKL-35 


Korea 




FMS 


T^RILLIUM AKL-170 


Korea 




FMS 


HOLT DE-706 


Korea 




FMS 



Nov 74 

Nov 74 
Nov 74 
Nov 74 
Nov 74 
Nov 74 
Nov 74 
Nov 74 
Nov 74 



166 



Ship 




Country 


MUIR DE-770 


Korea 


SUTTON DE- 


■771 


Korea 


LSM-17 




Korea 


LSM-19 




Korea 


LSM-30 




Korea 


LSM-54 




Korea 


LSM-57 




Korea 


LSM-84 




Korea 


APD-128 




Korea 


LSM-96 




Korea 


LSM-268 


, 


Korea 


LSM-316 




Korea 


LSM-462 




Korea 


LSM-546 




Korea 


LST-227 




Korea 


BERKSHIRE 


CTY 


Korea 


LST-288 






LST-1010 




Korea 


CURLEW MSCO-8 


Korea 


KITE MSCO-22 


Korea 


MOCKINGBIRD MSCO-2 7 


Korea 


PCE-873 




Korea 


PCE-882 




Korea 


LST-218 




Korea 



Authority* 


Date 


Remarks 


FMS 


Nov 


74 


Prev on loan 


FMS 


Nov 


74 


" 


FMS 


Nov 


74 


" 


FMS 


Nov 


74 


" 


FMS 


Nov 


74 


" 


FMS 


Nov 


74 


n 


FMS 


Nov 


74 


« 


FMS 


Nov 


74 


n 


FMS 


Nov 


74 


n 


FMS 


Nov 


74 


" 


FMS 


Nov 


74 


" 


FMS 


Nov 


74 


" 


FMS 


Nov 


74 


" 


FMS 


Nov 


74 


n 


FMS 


Nov 


74 


" 


FMS 


Nov 


74 


n 


FMS 


Nov 


74 


n 


FMS 


Nov 


74 


" 


FMS 


Nov 


74 


" 


FMS 


Nov 


74 


H 


FMS 


Nov 


74 


n 


FMS 


Nov 


74 


n 


FMS 


Nov 


74 


n 



167 



Ship 


Country 


Authority* 


Dat 


:e 


Remarks 


KRACKEN SS-370 


Spain 


FMS 


Nov 


74 


Prev on loan 


PICUDA SS-382 


Spain 


FMS 


Nov 


74 


" 


BANG SS-385 


Spain 


FMS 


Nov 


74 


- 


APL-53 


Turkey 


Loan 


Dec 


7f 




CLAUDE JONES 
DE-1033 


Indonesia 


FMS 


Dec 


7f 




MCMORRIS DE-1036 


Indonesia 


FMS 


Dec 


7t 




YO-221 


Peru 


FMS 


Feb 


75 


Prev on loan 


DRY TORTUGAS ATF 


Argentina 


FMS 


Feb 


75 


" 


SOMBRERO KEY ATF 


Argentina 


FMS 


Feb 


75 


II 


SALISH ATA-187 


Argentina 


FMS 


Feb 


75 


n 


CATAWBA ATA-210 


Argentina 


FMS 


Feb 


75 


" 


LUISENO ATF-156 


Argentina 


FMS 


Jul 


75 


Prev 'on loan 


CHEWAUCAN AOG-50 


Colombia 


FMS 


Jul 


75 


II 


DERRICK YO-59 


Korea 


FMS 


Jul 


75 


N 


YO-179 


Korea 


FMS 


Jul 


75 


If 


MSB-2 


Korea 


FMS 


Jul 


75 


n 


LCU-531 


Korea 


FMS 


Jul 


75 


" 


YOG- 61 


Philippines 


EDA 


Jul 


75 




YO-115 


Philippines 


EDA 


Jul 


75 




YO-116 


Philippines 


EDA 


Jul 


75 




YW-103 


Philippines 


EDA 


Jul 


75 




YW-111 


Philippines 


EDA 


Jul 


75 




YW-130 


Philippines 


EDA 


Jul 


75 





168 



Ship 

HEMMINGER DE-74 6 

VIREO MSC-205 

WARBLER MSC-206 

LST-689 

LST-835 

THRASHER MSC-203 

WHIPPOORWILL lCC-207 

HOLMES COUNTY 
LST-836 

DODGE COUNTY 
LST-722 

CRESTVIEW PCE-895 

BRATTLEBORO PCER-852 

GAYETY MSF-239 

SHELTER MSF-301 

MARION COUNTY LST-975 

CAYUGA COUNTY LST-529 

ORCA AVP-49 

LAPON SS-260 

SCABBARDFISH SS-397 

CAMP DER 251 

BERING STRAIT 
WHEC-382 

YAKUTAT WHEC-380 

CASTLE ROCK WHEC-383 

COOK INLET WHEC-384 

CHINCOTEAGUE 
WHEC-375 

MCCULLOCH WHEC-386 



Country 


Authority 


Date 


Remarl 


ks 


Thailand 


Grant 


Jun 


75 






Fiji 


FMS 


Oct 


75 






Fiji 


FMS 


Oct 


75 






Philippines 


Grant 


Nov 


75 






Philippines 


Grant 


Nov 


75 






Singapore 


FMS 


Dec 


75 






Singapore 


FMS 


Dec 


75 






Singapore 


FMS 


Dec 


75 


Prev on 


loan 


Thailand 


FMS 


Dec 


75 






Philippines 


Grant 


Feb 


76 






Philippines 


Grant 


Feb 


76 






Philippines 


Grant 


Feb 


76 






Philippines 


Grant 


Feb 


76 






Philippines 


Grant 


Feb 


76 






Philippines 


Grant 


Feb 


76 






Ethiopia 


FMS 


Mar 


76 


Prev on 


loan 


Greece 


FMS 


Apr 


76 


Prev on 


loan 


Greece 


FMS 


Apr 


76 


Prev on 


loan 


Philippines 


FMS 


Apr 


76 






Philippines 


FMS 


Apr 


76 






Philippines 


FMS 


Apr 


76 






Philippines 


FMS 


Apr 


76 






Philippines 


FMS 


Apr 


76 






Philippines 


FMS 


Apr 


76 






Philippines 


FMS 


Apr 


76 







169 



AMHERST PCER-853 


Philippines 


FMS 


Apr 


76 






JEROME COUNTY 


Philippines 


FMS 


Apr 


76 






iST-848 


















HARNET COUNTY 


Philippines 


FMS 


Apr 


76 






AGP-821 


















GARRETTCOUNTY 


Philippines 


FMS 


Apr 


76 






AGP- 7 86 


















YOG- 80 


Philippines 


FMS 


Apr 


76 






PLACERVILLE PC-1087 


Rep 


of 


China 


FMS 


May 


76 


Prev 


loan 


HANFORD PC- 11 4 2 


Rep 


of 


China 


FMS 


May 


76 


Prev 


loan 


SUSANVILLE PC- 114 9 


Rep 


of 


China 


FMS 


May 


76 


Prev 


loan 


ELKHORN AOG-7 


Rep 


of 


China 


FMS 


May 


76 


Prev 


lease 


NAMAKAGON AOG-53 


Rep 


of 


China 


FMS 


May 


76 


Prev 


lease 


PECATONICA AOG-57 


Rep 


of 


China 


FMS 


lay 


76 


Prev 


loan 


CAHOKIA ATA-186 


Rep 


of 


China 


FMS 


May 


76 


Prev 


lease 


MAHOPAC ATA-196 


Rep 


of 


China 


FMS 


May 


76 


Prev 


lease 


CHICKASAW ATF-83 


Rep 


of 


China 


FMS 


May 


76 


Prev 


loan 


I4ARK AKL-12 


Rep 


of 


China 


FMS 


May 


76 


Prev 


lease 



170 



Ship 




Country 


Authority 


Date 


Remarks 


LST-629 




Singapore 


FMS 


Jun 


76 




LST-579 




Singapore 


FMS 


Jun 


76 




LST-64 9 




Singapore 


FMS 


Jun 


76 




LST-613 




Singapore 


FMS 


Jun 


76 




LST-623 




Singapore 


FMS 


Jun 


76 




WOODPECKER (MSC-20 9) 


Fiji 


FMS 


Jun 


76 




CHICKADEE 
NANSEMOND 
LCU-1471 


(MSF-59) 

COUNTY LST 


Uruguay 
1064 Philipp 
Spain 


FMS 

ines Grant 

FMS 


Jun 
Aug 
Aug 


76 
76 
76 


Prev on loa 
Prev on loa: 


LCU-1491 




Spain 


FMS 


Aug 


76 


Prev on loa 


TENCH (AGSS-417) 


Peru 


FMS 


Sep 


76 




ETLAH (ANL-7 9) 


Dom Rep 


FMS 


Sep 


76 




PASSACONAWAY 
{ANL-86) 


Dora Rep 


FMS 


Sep 


76 




PASSAIC (ANL-87) 


Dom Rep 


FMS 


Sep 


76 




AMICK (DE-168) 


Philippines 


FMS 


Sep 


76 




ATHERTON ( 


(DE-169) 


Philippines 


FMS 


Sep 


76 




LST-74 




Philippines 


FMS 


Seo 


76 




LST-287 




Philippines 


FMS 


Sep 


76 




LST-2 30 




Philippines 


FMS 


Sep 


76 




LST-491 




Philippines 


FMS 


Sep 


76 




LST-566 




Philippines 


FMS 


Sep 


76 




LST-607 




Philippines 


FMS 


Sep 


76 




LST-692 




Philippines 


FMS 


Sep 


76 




LST-822 




Philippines 


FMS 


Sep 


76 




LST-1069 




Philippines 


FMS 


Sep 


76 




LST-1072 




Philippines 


FMS 


Sep 


76 





171 



Ship 

HENRY COUNTY 
(LST-824) 

SEDGEWICK COUNTY 
(LST-1123) 

HEERMANN (DD-532) 

STEMBEL (DD-644) 

DORTCH (DD-670) 

SATYR (ARL-23) 

WHITEMARSH (LSD- 8) 

ARD-9 

POWELL (DD-686) 

ERBEN (DD-631) 

HICKOX (DD-673) 

LARSON (DD-830) 

CHEVALIER (DD-805) 

MINOTAR (ARL-15) 

SUMMIT COUNTY 
(LST-1146) 

yFB-82 

YFB-86 

AFDL-26 

YTL-211 

YTL-567 

YR-37 

NEW (DD-818) 

RICHARD E. KRAUS 
(DD-849) 



Country 


Authority 


Date 


Remarks 


Malaysia 


FMS 


Oct 76 




Malaysia 


FMS 


Oct 7 6 




Argentina 


FMS^" 


Jan 77 


Prev loan 


Argentina 


FMS* 


Jan 7 7 


Prev loan 


Argentina 


FMS* 


Jan 77 


Prev loan 


Philippines 


FMS* 


Jan 77 




Rep of China 


FMS* 


Jan 77 


Prev loan 


Rep of China 


FMS*^ 


Jan 77 


Prev lease 


Korea 


FMS^ 


Jan 77 


Prev loan 


Korea 


FMS* 


Jan 77 


Prev loan 


Korea 


FMS*^ 


Jan 77 


Prev loan 


Korea 


FMS* 


Jan 77 


Prev loan 


Korea 


FMS* 


Jan 77 


Prev loan 


Korea 


FMS^ 


Jan 77 


Prev loan 


Ecuador 


FMS 


Feb 77 




Paraguay 


FMS 


Feb 77 


Prev lease 


Paraguay 


FMS 


Feb 77 


Prev lease 


Paraguay 


FMS 


Feb 77 


Prev lease 


Paraguay 


FMS 


Feb 77 


Prev lease 


Paraguay 


FMS 


Feb 77 


Prev lease 


Paraguay 


FMS 


Feb 77 


Prev lease 


Korea 


FMS* 


Feb 77 




Korea 


FMS* 


Feb 77 





^Authority - PL 94-457 



172 



Ship 

AMPHION (AR-13) 

ARCO (ARD-29) 

GURKE (DD-783) 

TERRELL COUNTY 
(LST-1157) 

WHITEFIELD COUNTY 
(LST-1169) 

RINGOLD (DD-500) 

CLAXTON (DD-571) 

WADS WORTH (DD-516) 

DYSON (DD-572) 

FORT MARION (LSD- 22) 

BRADFORD (DD-54 5) 

BROWN (DD-54 6) 

AULICK (DD-569) 

CHARRETTE (DD-581) 

CONNER (DD-582) 

HALL (DD-583) 

EPPERSON (DD-719) 

WILTSIE (DD-716) 

R.B. ANDERSON 
(DD-786) 

ROWAN (DD-78 2) 



Country 


Authority 


Date 


Remarks 


Iran 


FMSr 


Mar 


77 


Prev loan 


Iran 


FMS« 


Mar 


7 7 


Prev loan 


Greece 


FMS#^ 


Mar 


77 




Greece 


FMSV 


Mar 


77 




Greece 


FMst^ 


Mar 


77 




W. Germany 


FMS«^ 


Mar 


77 


Prev loan 


W. Germany 


FMS** 


Mar 


77 


Prev loan 


W. Germany 


FMS<? 


/Mfer 


77 


Prev loan 


W. Germany 


FMS*^ 


Mar 


77 


Prev loan 


Rep of China 


FMS^ 


Apr 


77 




Greece 


FMS^ 


Apr 


77 


Prev loan 


Greece 


FMS* 


Apr 


77 


Prev loan 


Greece 


FMS* 


Apr 


77 


Prev loan 


Greece 


FMSt 


Apr 


77 


Prev loan 


Greece 


m^ 


Apr 


77 


Prev loan 


Greece 


FMS» 


Apr 


77 


Prev loan 


Pakistan 


FMS*^ 


Apr 


77 




Pakistan 


FMS*' 


Apr 


77 




Rep of China 


FMS 


Jun 


77 




Rep of China 


FMS 


Jun 


77 





« Authority - PL 94-457 



173 



Shii 



GIBBS AGOR-1 
YTL-426 
yTL-4 41 
YTL-443 
YTL-4 4 4 
YTL-44 5 
YTL-44 8 

BORDELON DD-881 
SARSFIELD DD-837 
POWER DD-839 
CHOWANOC ATF-100 
CAPITAINE SS-336 
VOLADOR SS-490 
PICKEREL SS-524 



Country 

Greece 

Argentina 

Argentina 

Argentina 

Argentina 

Argentina 

Argentina 

Iran 

Rep of Chi 

Rep of Chi 

Ecuador 

Italy 

Italy 

Italy 



Authority 


Date 


Remarks 


FMS 


May 


77 


Prev lease 


FMS 


Jun 


77 


Prev lease 


FMS 


Jun 


77 


Prev lease 


FMS 


Jun 


77 


Prev lease 


FMS 


Jun 


77 


Prev lease 


FMS 


Jun 


77 


Prev lease 


FMS 


Jun 


77 


Prev lease 


FMS 


Jul 


77 




FMS 


Oct 


77 




FMS 


Oct 


77 




FMS 


Oct 


77 




FMS 


Dec 


77 


Prev on loan 


FMS 


Dec 


77 


Prev on loan 


FMS 


Dec 


77 


Prev on loan 



* Loan - each loan is on government -to -government basis in accordance 
with the public law indicated or Section 503 of the Foreign 
Assistance Act of 1961 as amended. 

Lease - leases are on a Navy to Navy basis under 10 USC 2667. 

FMS - sales under the Arms Export Control Act. 

EDA - Excess Defense Article. 



APPENDIX X 
Statement By The President, February 1, 1978 

[OflRce of the White House Press Secretary] 

The United States Government, the Executive Branch and the 
Congress, are pledged to bring cibout a reduction in the trade 
in conventional arm's. Last year, I promised to begin reduc- 
ing U. S. arms sales as a necessary first step. I will con- 
tinue that policy this year. 

In the last fiscal year, the previous Administration and my 
Administration maide sales commitments totaling many billions 
of dollars. While high, however, the total was considerably 
less than it would have been in the absence of new restraints 
we introduced, particularly in sales commitments to the develop- 
ing countries of the world. Between January 20 and the close 
of the fiscal year, I approved and sent to Congress arms sales 
totaling $5.7 billion, which is less than half the total ap- 
proved during the same period in 1976. 

Today, I am announcing that arms transfer agreements covered 
by the ceiling which I have established will be reduced by 
$740 million in Fiscal Year 1978. This means that for the 
fiscal year which began on October 1, 1977, and which will 
end on September 30, 1978, new commitments under the Foreign 
Military Sales and Military Assistant programs for weapons 
and weapons-related items to all countries except NATO, Japan, 
Australia and New Zealand will not exceed $8.6 billion. The 
comparable figure for Fiscal Year 1977 was $9.3 billion. 
This is a reduction of 8 percent, figured on constant Fiscal 
Year 1976 dollars. 

A larger cut in the ceiling would violate commitments already 
made, including our historic interest in the security of the 
Middle East, and would ignore the continuing realities of world 
politics and risk the confidence and security of those nations 
with whom the United States has vital and shared foreign policy 
and security interests. A smaller reduction would neglect 
our responsibility to set an example of restraint that others 
might follow. 

(174) 



175 



I intend to make further reductions in the next fiscal year. 
The extent of next year ' s reduction will depend upon the world 
political situation and upon the degree of cooperation and 
understanding of other nations. 

I want to emphasize that the restraint policy I announced on 
May 19, 1977, was not aimed exclusively at the volume of arms 
transfers. Equally important is restraint in the sophistica- 
tion of arms being transferred and on the spreading capability 
to produce armaments. Therefore, in addition to the ceiling, 
I established five specific controls applicable to all trans- 
fers except those to our NATO allies, Japan, Australia, and 
New Zealand. These controls included: (1) a control on the 
first introduction of certain advanced systems into an area; 
(2) a prohibition on advanced systems for export only; (3) a 
prohibition on various types of coproduction arrangements; 
(4) tighter controls on retransfer; and (5) special controls 
on sales promotions. 

These guidelines are at the heart of my decisions to approve 
or disapprove an arms transfer. 

As I stated in my October 4 speech to the United Nations, gen- 
uine progress in this area will require multilateral efforts. 
But, we are committed to taking the first steps alone to stop 
the spiral of increasing arms transfers. I call upon suppliers 
and recipients alike to join us in a determined effort to make 
the world a safer place in which to live. 

o 



UNIVERSITY OF FLORIDA 



3 1262 09119 7474